Bangladesh to gain from trade facilitation; duty privileges are still without legally binding commitment: CPD
The country stands to gain considerably from the ‘Bali package’ struck at the ninth WTO ministerial meet in Bali on Saturday if it acts judiciously, the Centre for Policy Dialogue (CPD) said yesterday. The keystone of the agreement, the first in the group’s 18-year history, is trade facilitation, which stipulates that measures will be taken to cut red tape and streamline customs and port procedures to ease the movement of goods through national frontiers.
“Trade facilitation is important for the country as it will reduce the cost of trading in Bangladesh,” the private think-tank said in its assessment of the landmark WTO deal in context to Bangladesh.
The findings of the study were shared with reporters yesterday by the think-tank’s research director Fahmida Khatun.
Bangladesh as a least-developed country (LDC) is entitled to both technical and financial support to implement the feature, and CPD said the country could do well by taking the opportunity to enhance its infrastructure and incorporate modern customs systems and behaviour.
As part of the LDC package, one of the three pillars of the historic deal, Bangladesh is allowed preferential access to richer countries’ services markets. A high-level meeting is scheduled in 2014 to decide on how to go about this feature.
Khatun said it is a “good opportunity” for the country to increase its export of semi-skilled and skilled manpower, but much homework is needed to identify the sectors and countries to export.
Other than presenting the sectors and modes for potential exports, Bangladesh should press for elimination of non-tariff barriers such as the ‘economic needs test’, a test that conditions market access upon the fulfilment of certain economic criteria, at the meeting next year.
“Bangladesh needs financial and technical support to strengthen its domestic support capacities to take advantage of the granted preference,” the report said.
About the much-touted duty-free and quota-free (DF-QF) access of LDC products to developed and developing countries, the CPD is sceptical about the efficacy of the feature.
The ninth ministerial conference outcome document states that developed country members that do not yet provide DF-QF market access for at least 97 percent of products originating from LDCs “shall seek” to improve their coverage before the next ministerial meet.
The CPD noted that there is no specific timeframe and legally-binding commitments attached to this feature. More importantly, garment, the country’s main export item, is on the ’3 percent exclusion list’ of the US, the country’s single largest export destination.
“Unless the obligation is legally binding with concrete timeframe Bangladesh will not receive any additional benefit,” the report said.
Mustafizur Rahman, executive director of CPD, said the country “has to hammer to make it meaningful”, adding that tariffs are fast falling, so the benefits of DFQF are eroding rapidly.
About the limitless public stockholding championed by India on grounds of food security in developing countries, the think-tank said higher procurement by the neighbouring country, Vietnam or Thailand could raise food prices regionally and adversely affect Bangladeshi consumers.
The report also said that the high stock piles “when needed may be dumped” in the international market, which could have a dampening effect on global food prices. “Food exporting countries may be out priced, but Bangladesh not being a net food importing country may stand to gain from it.”
Moreover, the stockpiling of food could result in ban on export of food (rice), which may have adverse impact for Bangladesh during times of food crisis.
The Bali package also stipulates that a “monitoring mechanism” be set up with to review the special treatment given to developing countries and LDCs, with the objective of improving the beneficiaries’ ability to utilise them.
“Such mechanism will provide opportunities for Bangladesh to raise issues and flag difficulties faced in implementing the provisions,” the report said, while calling for Bangladesh to take a more proactive role in this aspect.
As part of the LDC, the country is also entitled to simplified rules of origin (RoO), which, in theory, will make it easier to identify products as its own and qualify for preferential treatment in importing countries.
In order to make the feature effective for LDCs, the report said that the domestic value addition criteria be defined in such a way that it takes cognisance of domestic supply-side and productive capacities of the 49 countries and are easy to comply with.
CPD proposed that the RoO as defined under the Canadian Generalised System of Preference scheme — which is 25 percent local value-addition requirement — be used as the benchmark.
-With The Daily Star input
