High Value-Addition
Participation of B’desh in D-8 PTA uncertain
Bangladesh’s participation in the preferential trade agreement under the Developing-8 looks uncertain due to rigid stance of other member countries on 40 per cent value-addition in trade under rules of origin, commerce ministry officials said. They said that commerce ministry had been requesting the member states of D-8 for relaxing the rules of origin condition setting 30 per cent value-addition for Bangladesh to avail tariff concession in the bloc but they were not agreeing with the proposal.
In a general sense, value-addition is defined as value of output minus value of inputs. Value-addition under rules of origin is measured following various methods and one is the deduction of the prices of imported contents of export goods from the total export value.
At the upcoming second meeting of the D-8 trade ministers’ council scheduled in October 20-21 in Turkey, Bangladesh will negotiate to get 30 per cent value-addition facility under the PTA to boost its export to the countries, they said.
‘We will demand 30 per cent value-addition benefit as a least developed country in line with the article 3 of the preferential trade agreement among D-8 countries,’ a senior commerce ministry official said.
According to the article 3, the organisation will recognise the needs of the LDCs.
Among the member states, only Bangladesh is a least developed country.
Bangladesh will also argue that other seven countries should relax the condition for the country as they also accepted 30 per cent value-addition in the trade preferential system of the Organisation of the Islamic Conference, he said.
The D-8 PTA among the countries signed in 2006 and came into force in 2011 as Pakistan, Nigeria, Indonesia, Malaysia, Iran and Turkey had already ratified the agreement where Bangladesh and Egypt yet to ratify it.
Egypt is demanding 50 per cent value-addition condition for availing the tariff concession.
At the upcoming meeting of the D-8 trade ministers’ council, Bangladesh’s proposal will be discussed, according to the agenda of the meeting where a Bangladesh delegation led by commerce minister Tofail Ahmed will attend.
Officials said that Bangladesh would not accept 40 per cent value-addition as it would not help in boosting export in the bloc as local exporters could not meet the requirement.
On the other hand, there are 30 per cent or less value-addition condition for Bangladesh in all other free trade agreement or PTA, they said adding that Bangladesh’s benefit would be at stake in those FTA or PTA if it agrees with 40 per cent value-addition in the D-8.
Bangladesh may be excluded from the agreement if it does not ratify the agreement with the existing condition.
An exclusion from the agreement means Bangladesh will not get any benefit of the PTA such as reduced duty rate in export among the member countries, officials said.
For meeting the condition of 40 per cent value-addition, the export price must be Tk 100 of a product produced with imported materials worth Tk 60 which is almost impossible for many Bangladeshi exporters of the readymade garment sector particularly woven products in which most materials are needed to import.
The products Bangladesh exports to the D-8 countries will not be able to get such a big value-addition, officials said.
In 2013-2014 fiscal year, Bangladesh exported products worth $1,206 million against import of products worth $3,989 million, according to the commerce ministry data.
Currently, Bangladesh exports mainly readymade garments, leather products, rubber, jute goods, agro-processed products and bicycle to the D-8 countries. The products usually have low value-addition.
-With New Age input
