TIFA deal likely to help face post-LDC graduation challenges

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

As per United Nations recommendations, Bangladesh will enter into developing country status brackets in 2026. In the wake of Post-LDC graduation challenges, the concerned ministry people are on the move. Their untiring efforts are underway, no doubt. Meanwhile, it is informed that Bangladesh and Australia are moving fast, aiming to sign the deal styled” Trade and Investment Framework Agreement (TIFA).” 

Bangladesh’s economy now feels the emergence of foreign capital to address upcoming trade-related challenges. It is TIFA that brings immense benefits in terms of 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 the TIFA journey to bolster bilateral trade and investment between the two nations.

Under the TIFA pact, Bangladesh is set to export RMG items, textiles, footwear, leather articles, frozen fish, jute, pharmaceuticals, and ceramics to Australia. On the contrary, Bangladesh imports cotton, edible vegetable cereals, copper, iron and steel, paper, zinc, and machinery from Australia. It is expected that annual bilateral trade will reach $ 5.0 billion following the signing of the TIFA deal.

As Bangladesh carries LDC status, Bangladesh has been allowed to access Australian markets with the duty-and quota-free facility since 2003, subject fulfillment of Rules of Origin criteria. Despite having a duty-and quota-free facility, Bangladesh could not fuel significant trade volume. According to a newspaper report, in the 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 essential to mention that as of June 2020, Australian investment in Bangladesh stood at $ 845 million.

It must be noted here that in 2017, Australia signed a TIFA deal with the south Asian country- Sri Lanka. Australia has so far taken some visionary plans to shift its traditional markets from China, Japan, South Korea, and ASEAN.

Australia has; in the meantime, choose the south Asian area for boosting bilateral trade and investment volume.

After a long gap of over 20 years, Australia’s foreign minister visited Dhaka in 2019, indicating that the two nations are gradually approaching mutual economic benefit. Besides, assurance on the Rohingya repatriation issue came from Australian leaders. Australia would be a part among others at the time voicing the Rohingya issue. 

Bangladesh -Australia bilateral relations had been imbued with a humanitarian approach. Australia granted Official Development Assistance (ODA) during the post-Liberation war period in Bangladesh. The Australian government provided ODA worth $ 57.9 million in 2017-18. Nevertheless, selected Australian awards were suspended in 2015. Later, the awards were reopened, considering bilateral relations between the two nations. Australia and Bangladesh work closely on a range of shared 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 in 2011. Australia was among the first countries to recognize Bangladesh after its independence in 1971. Bangladesh is lucky enough to have a developed country like Australia on its side. The moment demands a TIFA deal because TIFA ensures duty-free facilities and investment facilities. Australia has already outlined its plan for injecting capital into Bangladesh. So, it is high time to welcome the Australian capital. TIFA deal is expected to lessen post-LDC graduation challenges to a great extent.

The writer is an economic affairs analyst. He can be reached at [email protected]