Bangladesh for WTO rule-based multilateral system instead of FTA

Bangladesh wants unified trade facilities under the World Trade Organisation’s (WTO) rule-based multilateral system, instead of signing bilateral free trade agreements (FTA), said Economic Relations Division Secretary Sharifa Khan.

The secretary was speaking at an event, titled “Strengthening Bangladesh-EU Trade and Economic Cooperation: Issues and Policy Priorities”, at the Sheraton hotel in Dhaka yesterday.

The Research and Policy Integration for Development (RAPID), a think-tank, and FES Bangladesh, the country office of the private German non-profit organisation, jointly organised the event.

Sharifa Khan said if the rule-based system of WTO is implemented, Bangladesh would not have to worry about duty issues. If the declaration of the Doha round is implemented, if the most favoured nation (MFN) benefit is allowed, the tariff will ultimately come down. If we look from a global perspective, the total MFN tariff on the non-agricultural product is only 2.8%. Then why the tariff on RMG is so high which is more than 12% on average? Is it to put the industry under pressure?

She added that the tariff on RMG products at different stages, produced by poor countries or LDCs for the EU and USA markets, is very high compared to any products, especially agriculture products. It also needs to be considered. If the tariffs come down to zero, there is no need to sign any FTA.

“So, I urge you to implement the declaration of Doha round fully and bring down the MFN rate to zero. There should be a rule-based multilateral system for all the member countries of WTO,” Sharifa said.

The safeguard clause, which brings down the import threshold to 6 per cent from 7.4 per cent, would be a problem for Bangladesh, she added.

She also called for responsible business practices on the importers’ side, instead of only on the exporters’ side. “There should be ethical buying practice,” she said.

Head of the delegation of the European Union to Bangladesh Charles Whiteley said that there is no possibility of signing an FTA with Bangladesh in the foreseeable future because of the complexity related to the issue as well as the bloc’s lack of interest.

This is not going to happen because of the degree of complexity, and the trade relations between the two sides are not yet at the stage where ‘we would be genuinely interested to negotiate an FTA’, he said.

Whiteley said the EU’s FTA with Vietnam is expected to bring down tariffs in many areas, but it will also bring massive benefits for European businesses, including in the service sector which is of interest to the European Union.

Expressing hope for more balanced and more wide-ranging bilateral trade relations between the EU and Bangladesh, he said, “It depends on the Bangladesh side to make it easier for the EU to do business in Bangladesh.”

Many European parliamentarians think that since Bangladesh will no longer be an LDC after 2026, there is no question of treating the country as an LDC. They also think that the three-year transition is long enough for the government and businesses of Bangladesh to adjust to the realities of not being an LDC, said Whiteley.

Since Bangladesh will not automatically qualify for duty-free, quota-free market access in the EU, the entire focus politically, financially and economically has to be on making the GSP Plus, he said.

Mohammad Abdur Razzaque, chairman of the RAPID, said Bangladesh can apply for GSP Plus based on vulnerability criteria and sustainable development criteria. But even with GSP Plus, the RMG products’ duty-free access could discontinue due to the stricter rules of origin.