Bangladesh faces huge trade deficit
Informal trade, non-tariff barriers and poor infrastructure are the major reasons behind the low level of intra-Safta trade, revealed in a study by the commerce ministry, pointing to Bangladesh’s huge trade deficit with other members of the trade block. ‘Reasons for the low-level of intra-Safta trade include political disputes (mainly between India and Pakistan), poor infrastructure and thus, high transport costs, and a low level of trade complementarities, with textiles and apparels dominating intra-regional trade,’ reads the report.
‘Traditionally, there are high levels of informal trade estimated to exceed the formal trade levels. Insufficient tariff reductions and multiple NTBs (non-tariff barriers) hamper the increase of formal trade.’
Commerce secretary Hedayetullah Al Mamoon said a high-powered working group has been perusing to meaningfully reduce the extent of NTBs so that trade among the member countries of the South Asian Free Trade Area is increased and Bangladesh gets benefit.
‘We have been closely monitoring to trim down the list of NTBs as the trade barrier has long been deterrent to Bangladesh trade, particularly on its export to regional countries,’ Mamoon told New Age.
He said the big member countries of Safta have roles to maximize trade among South Asian nations.
Highlighting the major NTBs, the report said the trade within Safta would increase manifold once numerous tariff barriers hampering the trade flow and growth within the region are lifted away.
The report prepared in last month under the EU-Bangladesh trade policy support programme also highlighted the country’s entire trade regime with special focuses on trade relations with the US, EU and World Trade Organisation.
The NTBs that act as deterrents to regional trade and business include the governments’ interventions such as export subsidies, monopolies and restrictions, customs and administrative entry procedures such as anti-dumping duties, import licenses and restrictive rules of origin, technical barriers to trade like regulations on standards, sanitary and phytosanitary measures and specific limitations like quantitative restrictions, minimum prices and embargoes.
Besides, the report said import charges such as administrative fees, additional border taxes, and procedural problems such as administrative discrimination, lengthy procedures, complexity and lack of information are some other major factors that act as NTBs in trade within South Asian nations.
Senior officials at the commerce ministry said most of the NTBs highlighted in the report are discriminately imposed by India on exports from Bangladesh and other Safta states.
‘India is a major player to boost its trade within Safta region, and reduces trades from other member countries to its economy,’ a senior trade official at the commerce ministry said.
Bangladesh’s exports are heavily concentrated in both products and markets. RMG accounts for about 80 per cent of total exports and two markets absorb three quarters of total exports, namely the EU (50 per cent) and the US (25 per cent).
Secondary relevant export markets are China and Hong Kong (about 4.5 per cent), Canada (3.5 per cent) and India (3 per cent). The importance of these export markets is followed by Japan, Turkey and Singapore, which account together for about 3 per cent of Bangladesh’s exports, according to a report of WTO 2012.
Bangladesh’s trade with South Asian Free Trade Area accounted for US$ 5.91 billion in 2012, which equals a share of 11 per cent of its total trade. However, trade remains biased towards India, which accounts for almost 90 per cent of Bangladesh’s Safta trade, the report said.
The study report said Safta is characterized by a low and shrinking level of intra-regional trade accounting for less than 4.5 per cent in 2012. India, as the largest and most diversified economy, dominates intra-Safta trade, accounting for almost 80 per cent of regional exports.
Intra-Safta trade focuses on textile and garments concentrated to few markets (India, Pakistan, Sri Lanka and Bangladesh). Bangladesh has a trade deficit with Safta, with the amount of imports exceeding the amount of exports by about eight times in 2013, the report said.
-With New Age input
