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The commerce ministry has formed two separate committees to start negotiations with India over signing a proposed Comprehensive Economic Partnership Agreement (Cepa) to boost bilateral trade and investment in the post-LDC period.
The negotiation committee is headed by Additional Secretary to the commerce ministry Noor Mahbubul Haque while the advisory committee by Senior Commerce Secretary Tapan Kanti Ghosh.
“We will start the negotiations soon as we are ready now,” Ghosh told The Daily Star.
Formal negotiation of the Cepa was supposed to be launched a few months ago but has been delayed a bit as the Indian side wanted to further examine a joint study, he said.
Now the new date will be finalised in consultation with both countries for launching the negotiation, as Bangladesh is ready, he said.
In September last year, both Prime Minister Sheikh Hasina of Bangladesh and Prime Minister Narendra Modi of India in a joint statement welcomed the recent finalisation of the joint feasibility study which recommended that a Cepa would be beneficial for both countries.
They directed trade officials on both sides to start negotiations within 2022 and to complete these at the earliest, in time for Bangladesh’s final graduation from the least developed country (LDC) status, the joint statement also said.
The signing of the Cepa with India is also a part of the country’s preparation to face the challenges of the LDC graduation in 2026, said Ghosh.
Because the status graduation to a developing country will also erode Bangladesh’s preferential trade benefits, he said.
Currently, India is the second largest source of imports for Bangladesh after China.
Annually, Bangladesh imports nearly $15 billion worth of goods like textiles and fabrics, industrial raw materials and intermediate goods, food items, cotton and chemicals for industrial use.
On the other hand, as an LDC, Bangladesh has been enjoying duty-free benefits on export to India under South Asian Free Trade Area (Safta), a free trade arrangement of the South Asian Association for Regional Cooperation (Saarc).
Bangladesh’s exports to India amount to nearly $2 billion annually.
In August last year, the joint study said Bangladesh might not make a large gain from a Cepa. This was due to the fact that Bangladesh would lose duty-free market access provided for it being an LDC.
Comparatively, India will make a larger gain from the trade deal primarily through the removal of high tariff rates it currently faces in Bangladesh, said the study.
Bangladesh Foreign Trade Institute (BFTI) and the Centre for Regional Trade (CRT) of India jointly conducted the study last week based on trade data between 2015 and 2020.
If signed, the CEPA will be the first free trade agreement of its kind as Bangladesh has till date signed only a preferential trade agreement with Bhutan in December 2020.
Moreover, Bangladesh has the potential to benefit from the trade of services in tourism, transport and educational cooperation and also creation of jobs locally from Indian investment.
The proposed deal, which calls for a withdrawal of duties, is expected to boost Bangladesh’s exports by 190.15 per cent and more if transaction costs are also reduced through improved connectivity, according to the study.
India’s exports to Bangladesh are expected to increase by 188 per cent. The Cepa will increase Bangladesh’s GDP by 1.72 per cent and India’s by 0.03 per cent, the study found.
Bangladesh has also been negotiating with Japan for signing either an economic partnership agreement or free trade agreement to continue the trade benefit in the post-LDC period, Ghosh also said.
(TDS)
