Since long, Bangladesh and China had been maintaining friendly- relations. A lot of mega projects funded by China are now being built. Financial assistance from China just after Japan is really impressive. Besides, China keeps eyes on us in any affairs regarding economic development.
China’s care towards Bangladesh never ends. China’s USD 38 billion investment in Bangladesh, in combination with USD 24.45 billion in bilateral assistance for infrastructure projects and USD 13.6 billion in joint ventures in addition to the USD 20 billion in loan agreements that were made soon after the visit of President Xi Jinping in 2016.
After a long gap, China responded another request placed by Bangladesh earlier. The objective of responding is to widen trade facilities. Bangladesh is allowed to push some 8,256 products to China from July under tariff-free contract. The World Trade Organization ( WTO) has set a lot of guidelines related to trade facilities given to least developed countries.
Against the backdrop of rules and regulations set by WTO earlier , many countries are now struggling to avail the granted facilities. Vietnam, Cambodia, Bangladesh among other least developed countries had been trying their level best to get duty and quota-free entrance to many countries.
With huge trade deficit, Bangladesh never reaches the goals to be a middle-income countries one. So, finding no other alternatives, the country is in process of talking with many countries having high demand on Bangladeshi products. Already, the talks with long lasting trading partners had been finalized.
Now, there comes many business related opportunities before Bangladesh. It is high time to grab the much-needed opportunities for greater interest of our economy. Our foreign ministry began to talk with many countries aiming to push Bangladesh-made products as part economic diplomacy. As a result of long waiting after sending proposal to China, the success came all on a sudden.
What are waiting in the fate of Bangladesh economy after LDC graduation is not possible to predict clearly. But, considering the possible trade related problems, Bangladesh has to take strategic programs right now. Vietnam and Cambodia have already started moving around the world to take up business facilities.
To keep pace with them (our competitors), the need for arranging non-stop business dialogues is a must. Coronavirus-ravaged economy needs huge attention given from developed nations. Otherwise, the economy with trade gap might face hurdle to move ahead.
Tariff Commission of state council of ministry of finance of the people’s Republic of China recently issued a notice on granting zero treatment to 97% of tariff products of Bangladesh. Bangladesh is lucky to have such permission letter approved by China following our request in view of WTO directives. Under the approval, around 5,161 Bangladeshi products will be allowed in China on the basis of duty-free and quota free (DFQF) scheme.
The benefit was given by China to Bangladesh as a least developed country (LDC) under the World Trade Organization provisions. This facility is in addition to preferential duties that we are already enjoying from China under Asia -Pacific Trade Agreement (APTA). So, from this July, a total of 8,256 products will enjoy duty-free facilities in Chinese market.
These long-desired facilities are set to minimize trade gap between Bangladesh and China. Being least developed country, Bangladesh never saw trade balance after so many years of independence. In 2017-18 fiscal year, a total of US$ 17000 million was recorded as trade deficit with one hundred countries.
It is important to note that China every year imports products worth US$ 2 trillion from various countries of the world. Bangladesh so far could not expand export to China due to tariff related problems. Only the products worth US$ 200 to US$ 300 crore was exported there from Bangladesh resulting in huge trade gap. China is the largest trade partner for Bangladesh with annual bilateral trade totaling over $ 13 billion. In the fiscal year 2018-19, Bangladesh imported goods worth $12 billion from China and exported goods less than $1 billion.
Export to China from Bangladesh did not get momentum over the decades due to high tariff rate. Bangladesh exported products to China worth $ 791 million in FY 15, $ 808.1 million in FY 16, $ 949.4 million in FY17, $650 million in FY18, $831.2 million in FY 19 and $ 531.8 ( approximately) million in FY20.
China - a country with around US$ 9.2 trillion nominal GDP-had been dominating the world through expanding export. Mainly least-developed countries are its trading partners. China came in focus within brief time for producing the electronic products that are being made marketing worldwide on condition of reasonable prices. Bangladesh is no exception in respect of importing Chinese products. Bangladesh tried its best to enter into Chinese markets with Bangladesh-made products.
But, excess duty was the main barrier. Chinese tariffs are very high compared with those of the EU and the USA- the two main export destinations for Bangladesh. The average tariff to the EU and USA is 12 percent and 15.62 percent. On the contrary, exporters face tariff rates 25 percent to 30 percent in China.
On the contrary, Bangladesh has recently finalized a bilateral free-trade agreement (FTA) deal with Bhutan which comes into effect soon. Under maiden FTA, that is to be signed shortly, two South Asian countries are likely to experience economic activities. Dhaka –Thimphu trade relations are not remarkable.
FTA deal held recently would help the two nations for expand trade activities to a great extent. Currently, 19 Bhutanese products are enjoying duty-free access to Bangladeshi market. In a high-level meeting held in 2018, Bhutan requested Bangladesh to approve 16 products more for duty-free access in the country. As Bhutan is not a World Trade Organization ( WTO) member, Bangladesh as a WTO member can’t extend facilities placed by Bhutan side.
Under the deal, that will be signed by 30 August-2020, some 100 Bangladeshi products will enjoy duty-free access to the Bhutanese market. On the other, some 34 Bhutanese will also enjoy duty-free access to Bangladesh market. The volume of bilateral trade between the two countries at US$ 57.90 million in the fiscal year 2018-19. It was only US$ 26.52 million in the FY 2012-13. Apparels , food items, plastics, pharmaceuticals, furniture, electrical products would be exported to Bhutan. Bangladesh will import chemicals, pulps, bolder stones, fruits, vegetables from Bhutan.
Actually, China -Bangladesh bilateral relations started moving fast when Chinese President Xi Jinping came Bangladesh in October, 2016. So, the year -2016 has been significant one to us since Xi Jinping always showed positive approach to stand by Bangladesh in any situation while visiting Dhaka. His two- day historic state visit indicated that China would remain beside Bangladesh as “all- weather friendship”. During his visit, he signed in more than two dozens deals amounting 2 thousand 53 crore US dollars for infrastructure development.
One of land locked countries- Bhutan officially recognized Bangladesh in the year 1971. Bhutan was the first country to recognize Bangladesh as an independent country in 06 December 1971. So, Bangladesh has many responsibilities to promote Bhutan through any kind of assistance. If economic corridors among India, Bangladesh, Bhutan and Nepal are built soon, there is huge possibility to expand economic activities.
Besides, road communication between Bangladesh and Bhutan needs to be constructed aiming to enhance bilateral trade. What should be noted here that free trade agreement with Nepal and Indonesia is underway. Besides, talks with Thailand, Malaysia is on the process regarding tariff-free trading. Bangladesh now moves forward through developing economic diplomacy with many nations.
The writer is an analyst of economic affairs. Email: [email protected]
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