Eu Study On Trade Policy
Bilateral FTA with India to weigh on B’desh economy
A bilateral free trade agreement with India would benefit India significantly and adversely impact the Bangladesh economy as India has the comparative advantage on export, reveals a study report of the European Union. The report, titled ‘Comprehensive Trade Policy’, said an FTA with India would impact negatively on Bangladesh’s revenue as the country imports more than 16 per cent of its total import volume from neighbouring India.
‘Estimates show that India would benefit from trade creation at the expense of Bangladesh i.e. India has the comparative advantage for almost all products bilaterally traded,’ reads the report, conducted last month under the EU-Bangladesh Trade Policy Support Programme.
‘An FTA would hardly improve Bangladesh’s market access to India,’ it said.
Officials concerned said they had formed a core committee to examine the findings of the EU-sponsored report that put its spotlight on the entire regime of trade related issues involving policies on export, import and incentives to promote external business.
India has long been pressing Bangladesh to strike a bilateral FTA deal for which the government showed little interests as most products currently exported from Bangladesh to India enjoy zero or very low tariffs, a senior trade official at the commerce ministry said.
The apparent duty-free market access facility in the Indian market turned out to be less advantageous for Bangladeshi exporters due largely to manifold non-tariff and para-tariff barriers, the official added.
‘An FTA would hardly improve Bangladesh’s market access to India given its current export portfolio,’ the report observed.
In 2012, Bangladesh sourced 16 per cent of its total imports from India. Major import products were cotton (accounting for 28 per cent of total imports), vehicles and machinery (13.5 per cent), cereals (9 per cent ), sugar (5 per cent ), animal food (4 per cent ), fibres and chemicals (2.5 per cent each).
Bangladesh’s exports to India are still small in total, accounting only for about 2 per cent of total exports in 2012. Major export products include RMG (accounting for 22 per cent of total exports), fish, edible fruits, mineral fuels, salt, copper and chemicals, officials said.
For India, Bangladesh remains a minor trading partner, accounting for 1.7 per cent of its total exports and 0.11 per cent of its total imports in 2012.
However, the report citing a WB report said an FTA would benefit in particular Bangladeshi consumers due to the abolition of tariffs and would be likely to accelerate SAFTA integration.
Highlighting on a number of negativities on a possible FTA, the report said Bangladesh’s major export product to India is RMG, which is also produced by India and regarded as sensitive. It is therefore unlikely that Bangladesh would improve its market access for RMG under a bilateral FTA significantly with respect to rules of origin, compliance and reduction of non-tariff barriers.
-With New Age input
