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Bangladesh looks to sign a free trade area (FTA) deal with the United States as it failed to get restored the generalised system of preferences (GSP) facility.
The Bangladesh Tariff Commission (BTC) has recently studied the pros and cons and found that the country could reap financial benefits of such a deal, officials said.
“The study shows that an FTA with the United States to trade in goods will be beneficial to us,” a senior BTC official told the FE on Sunday.
He said Bangladesh’s main exportable, apparel, enters the US market by paying a 15-per cent duty on average which makes it less competitive.
“If we can ensure a duty-free entry by signing an FTA deal, the benefit will be huge,” cited the official.
On the other hand, he said, Bangladesh mainly imports capital machinery from the United States whose duty is comparatively low.
“So, letting their products enter (our market) without paying duty won’t make us a looser,” the official went on to say.
He said a comprehensive study of the agreement is in the process which will define how beneficial the FTA in trade in service and investment will be.
Once the study is done, the official said, a formal proposal would be given to the USA to start negotiations.
Having failed to restore GSP facility suspended back in 2013 after the Rana Plaza collapse, another official said, Bangladesh opted for an FTA deal with the USA.
Since then, multiple labour and human rights issues have emerged as major barriers between the Bangladesh-USA bilateral relations.
Besides, there are differences regarding intellectual property rights which may also hinder any future trade deal with the USA, he said.
According to officials, Bangladesh ambassador in Washington Mohammad Ziauddin’s letter to commerce ministry last year was indicative of such things.
He said possibility was bleak that Washington would restore GSP facility for Dhaka again anytime soon.
Mr Ziauddin suggested that Bangladesh take steps to sign an FTA deal with the USA to lessen the duty burden.
Later, commerce ministry asked tariff commission to study the merits and demerits of such a deal, the official mentioned.
Available data shows the USA is a major investor in Bangladesh which mainly focuses on energy and power sectors.
In 2018, the US companies invested here some $2.1 billion, up by 43 per cent compared to 2017.
Bangladesh exported goods to the USA to the tune of $6.87 billion in fiscal year 2018-19.
Bangladesh’s major exportables to the USA include apparel, footwear, pharmaceuticals, plastic, leather, ceramic, tobacco and textile fibre.
When asked, Bangladesh Knitwear Manufacturers and Exporters Association vice-president Mohammad Hatem said Bangladesh is unlikely to get any trade benefit from the USA.
“It may not provide GSP facility or agree to sign an FTA deal with Bangladesh due to political reasons,” he told the FE the same day.
Mr Hatem, however, said Bangladesh should continue trying to sign an FTA deal with the USA which will be beneficial to the country.
This will work as a safeguard for Bangladesh to prevent any unethical pressure from the USA, he noted.
(FE)
