The commerce ministry is going to conduct an impact assessment study on the probable impact of the imminent free trade agreements between the European Union and some ASEAN countries on Bangladesh’s export, ministry officials said.
After getting request from the Bangladesh ambassador in Belgium, the ministry has recently asked the Bangladesh Tariff Commission to conduct an in-depth assessment of the probable impact of the proposed FTAs on Bangladesh’s export to the EU market and on the continued growth of trade relations with the EU.
Bangladesh embassy in Belgium has recently informed the ministry that the EU was currently negotiating or going to start negotiations separately with the countries of Association of South East Asian Nations like Vietnam, Singapore, Thailand, Malaysia and Indonesia for signing FTAs.
The EU has also lifted all sanctions against Myanmar with the exception of the arms embargo.
‘All the developments no doubts have direct relevance on the Everything But Arms status that Bangladesh enjoys under which Bangladeshi products get duty-free access to the EU market,’ the embassy said.
‘It would be important for Bangladesh to follow this enlarging EU-ASEAN partnership particularly as this might have important bearings on our trade relations with the EU,’ the letter said.
It said, ‘Most of the ASEAN countries are basically competitors of Bangladesh on the EU market. So it is necessary to analyse how far the EU’s conclusion of FTAs with these countries will impact our exports to the EU.’
Singapore has just completed FTA negotiation with the EU, the letter said. Thailand has started the negotiation while other countries like Vietnam, Indonesia and Malaysia are continuing the discussions, it said.
The EU and ASEAN senior officials met in Vietnam in May to explore further possibilities to upgrade enhanced partnership to a strategic partnership, the letter said, adding that in 2011, ASEAN was the EU’s third largest trading partner outside Europe while the EU was ASEAN’s third largest trade partner globally.
According to the letter, the EU in 2007 adopted a mandate to start FTA negotiations with the ASEAN countries but in 2009 it repealed the decision mainly because of political reasons centring Myanmar.
In 2009, the EU announced that it should be ready to engage in bilateral FTA negotiations with individual ASEAN countries. Such bilateral FTAs could constitute ‘building blocks’ that the EU and the ASEAN may wish to consolidate in due course into a region-to-region agreement.
The 27-nation bloc EU is the largest destination of Bangladesh’s export particularly exports of readymade garment with around $12 billion in 2012.
Bangladesh’s exports, particularly export of RMG products, to the EU are likely to be affected if EU signs the FTAs with these ASEAN countries as some of these countries are the main competitors of Bangladesh in exporting RMG on the EU market, the officials said.
Although most of the Bangladeshi products enjoy duty-free facility to the EU market, the challenge may come from these countries as their products will also get duty-free or concessional duty facility on the EU market after signing of the FTAs.
Currently, countries like Malaysia, Indonesia and Thailand have to pay duties at different rate on export of their products in the EU. Among the countries Thailand, Vietnam and Indonesia are strong in apparel items and major competitors of Bangladesh.
The officials said that when their products would get duty-free or concessional duty facility on the on the EU market, the price of their products will reduce and that may erode the advantage that Bangladesh enjoys over the competing countries.
The ultimate impact, however, will depend on how much the countries get preferential treatment in the FTA in export of products mainly apparel items to the EU, they added.
The main items Bangladesh exports to EU are readymade garments, frozen food, leather, jute and tea.
EU is the Bangladesh’s main trading partner, accounting for around 12 per cent of the country’s total trade. EU’s 90 per cent import from Bangladesh is clothing items, according to EU data.
-With New Age input
