Bangladesh-Australia TIFA Deal to Unlock Trade Barriers

As a least-developed country (LDC), Bangladesh had been pushing its own-made products in many countries paying no duty. Duty-free access of Bangladesh-made products to 38-country had been enjoyed since long. Under the scheme titled "Everything but Arms (EBA), the facility is being consumed. The EBA scheme, that is under Generalized System of Preferences (GSP), had been introduced for least-developed category countries. Formulated by the World Trade Organization (WTO), the GSP facility, known as duty-free facility, is being availed by close to 50 LDCs since long.

As per United Nations recommendations, Bangladesh is going to enter into the bracket of developing country status in 2026. In the wake of Post-LDC graduation challenges, the concerned ministry people are on move. Their untiring efforts are underway, no doubt. In the meanwhile, It is informed that Bangladesh and Australia are moving fast aiming to sign the deal styled" Trade and Investment Framework Agreement (TIFA)".  Bangladesh economy now feels the emergence of foreign capital in order to address upcoming trade-related challenges.  It is TIFA that brings immense benefit in terms trade and investment. The deal, TIFA is scheduled to be signed in the middle of September, this year. Australia, the world's 14th largest economy, begins TIFA journey in the aim of bolstering bilateral trade and investment between the two nations.

 Under TIFA pact, Bangladesh is set to export RMG items, textile, and footwear, articles of leather, frozen fish, jute, pharmaceuticals and ceramics to Australia. On the contrary, Bangladesh to import  cotton, edible vegetable cereals, copper, iron and steel, paper, zinc, machinery from Australia. It is expected that annual bilateral trade would reach $ 5.0 billion following signing of TIFA deal. As Bangladesh carries LDC status, Bangladesh had been allowed to access in Australia markets with duty-and quota- free facility since 2003 subject fulfillment of Rules of Origin criteria. Despite having duty-and quota- free facility, Bangladesh showed its inability to fuel significant trade volume. According to newspaper report, in fiscal year 2019-20, Bangladesh exported goods worth $678 million to Australia and $805 million in the previous year. On the other hand, Bangladesh imports from Australia worth $ 649 million in FY 2019-20, up from $597 million in the previous fiscal.  It is important to mention here that as of June, 2020 Australian investment in Bangladesh stood at $ 845 million.

It needs to be noted here that in 2017, Australia signed TIFA deal with south Asian country- Sri Lanka. Actually, Australia has so far taken some visionary plans in respect of shifting its traditional markets from China, Japan, South Korea, and ASEAN.  Australia has, in the meantime, chosen south Asian area for boosting bilateral trade and investment volume.  After a long gap of over 20-year , Australian's foreign minister visited Dhaka in 2019 indicating that the two nations are gradually approaching for mutual economic benefit. Besides, assurance on Rohingya repatriation issue came from Australian leaders. Hopefully, Australia would be a part among others at the time voicing on Rohingya issue. 

Bangladesh -Australia bilateral relations had been emerged with humanitarian approach. Australia granted Official Development Assistance (ODA) during post- liberation war period for war-torn Bangladesh. The Australian government provided ODA worth $ 57.9 million in 2017-18. Nevertheless, selected Australian awards had been suspended in 2015. Later, the awards were reopened considering bilateral relations between two nations. Australia and Bangladesh work closely on a range of common strategic interests in regional and global fora, including as members of the Indian Ocean rim Association ( IORA), and the Bali process on people Smuggling, Trafficking in Persons and related Transnational Crime.

The 2016 census recorded 41,233 people from Bangladesh living in Australia, up from 27,808 recorded in 2011.  Australia was among the first countries to recognize Bangladesh after it achieved independence in 1971. Bangladesh is lucky enough to have a developed country like Australia in its side. The moment demands TIFA deal because TIFA ensures not only duty-free facility but also investment facility. Australia already outlined its plan for injecting capital into Bangladesh. So, it is high time to welcome Australian capital.  TIFA deal is expected to lessen post-LDC graduation challenges to a great extent.


Md Mazadul Hoque is an economic affairs analyst.