Importance of FIPA to boost Trade, Canadian investment

Canada has been one of the most trusted development partners for Bangladesh since our independence. Even Canada extended its support to our war of independence in 1971.

Ever since the two countries established diplomatic relations on 14 February 1972, the relations, both political and commercial just kept growing and now it’s transformed into a robust partnership.

Thus, serving as High Commissioner in such a friendly and supportive country is an honour and privilege. After assuming the charge effectively from January 2021, one of my primary economic objectives was to strengthen and expand the existing commercial relations between Bangladesh and Canada, including increasing bilateral trade as well as attracting more Canadian investment in Bangladesh in line with the vision of the Hon’ble Prime Minister to actively promote economic diplomacy.

Today, it is pleasing for me that Bangladesh’s trade with Canada has reached its all-time record high of USD 3.23 billion by the end of 2022 (data of 2023 is yet to be published), with a substantial increase in both exports and imports in the last three years. Bangladesh’s exports to Canada have also reached an all-time high (USD 2.21 billion). However, the diversification of exports remains unsatisfactory again for a number of reasons mostly rooted in Bangladesh.

Also, pertinent to add that COVID-19 pandemic until the middle of 2022 was a major obstacle in many ways as Canada was the last country in the world to open following the pandemic. Our success in attracting Canadian investment also remains below par despite its immense potential, for several reasons, but primarily because of the absence of a Foreign Investment Protection Agreement (FIPA) with Canada.

Discussions on concluding a FIPA began in 2012, yet from the Bangladesh side, we have not been able to come up with a draft for FIPA for negotiations with the Canadian authorities. Despite my repeated requests to the Ministry of Industries (focal point for FIPA) and other relevant authorities in Dhaka, we have not even received any response to our several formal communications on this very important issue.

Urgency of concluding a FIPA with Canada now is more than ever following the appointment of Canada’s Trade Representative for Asia-Pacific based in Jakarta, Indonesia. The new Representative would assume office in the third week of January 2024. He has been known to me for last three years as he served as the Assistant Deputy Minister for Asia-Pacific Bureau in Global Affairs Canada; Bangladesh being part of this bureau. As per the wishes of our Commerce Ministry and other authorities, whenever we raised the issue of trade and investment as well as the ambitious efforts of negotiating a Free Trade Agreement (FTA) with Canada, the need for concluding a FIPA prior to that loomed large on our discussions and their outcomes. Similarly, whenever we approached any potential Canadian investors, they raised the issue of the need and importance of existence of a FIPA.

The issue of FIPA and a Blue Ribbon Pannel (Joint Working Group on Commercial Relations) were first brought to my notice by the former Canadian High Commissioner in Dhaka, His Excellency Mr. Benoit Prefontaine as soon as my name was announced as next High Commissioner in Canada on 16 August 2020. I must acknowledge the huge contribution of this great friend of Bangladesh to boost trade relations between Bangladesh and Canada and to attract Canadian investment to our country. It was under his leadership that a position of a Senior Trade Representative/Commissioner was established in the Canadian High Commission in Dhaka. Earlier, the issue of trade and investment with Bangladesh was concurrently managed from the Canadian High Commission in New Delhi. That was one of the reasons that Canadian investment in Bangladesh has been low or minimum. As I gathered, the Canadian Trade Commissioner sitting in New Delhi hardly looked beyond India as India itself has been a huge market. Therefore, today’s increased trade with Canada owes greatly to the efforts of the former Canadian High Commissioner Mr. Benoit Prefontaine.

Together, we were able to form a Blue Ribbon Pannel (08-Member Joint Working Group (JWG) comprising leading private sector leaders - 04 from Bangladesh and 04 from Canada). We are happy that the JWG completed its works and submitted their recommendations in December 2022 to their respective governments (Commerce Ministry in Bangladesh) to strengthen commercial relations between the two countries. Potential obstacles to and the areas of opportunities to boost trade and investment promotion between the two countries have been identified by JWG. I am happy that JWG’s recommendations were discussed at the last Foreign Office Consultation between the two countries held on 27 October 2023 in Ottawa.

I am writing this public piece for a number of reasons. First, despite repeated efforts and formal and informal communications concerned authorities in Bangladesh have not done anything about drafting a FIPA. Second, last month, Global Affairs Canada organized a briefing session for Heads of Mission on Canada’s IndiPacific Strategy and the Canada’s newly appointed Trade Representative for Asia-Pacific Mr. Paul Thoppil also took part in the briefing and outlined his vision on boosting Canadian trade and investment in and with the region.

I had a separate discussion with him on these issues there and we agreed to have more detailed discussions thereon. Accordingly, I had a long follow-up meeting with him in the first week of this month just before he left Ottawa to take up his new assignment as Canada’s Trade Representative for Asia-Pacific. Among other things, he reiterated that he would be working to strengthen and expand Canada’s commercial relations with countries in the Asia Pacific region, including Bangladesh.

Paul Thoppil categorically told me that concluding a FIPA is a prerequisite for attracting Canadian investment in Bangladesh. Moreover, he also reiterated that discussions regarding a Free Trade Agreement (FTA) can only commence after the FIPA has been finalized. Adding impetus to our cause, Mr. Thoppil also agreed to lead a high-level trade and investment delegation comprising representatives from the Canadian government, private sector, and key financial institutions like the Canadian Pension Fund, Brookfield Corporation, Fairfax Financial, and Sun Life Assurance of Canada to Bangladesh in early April 2024.

He would at least like to see a draft FIPA with Canadian authorities before this trade and investment mission to get some positive signals to assuage their investors about guarantee to their investment in Bangladesh. Immediately after the meeting, I wrote to concerned authorities in Dhaka to finalize a draft FIPA by convening inter-ministerial consultations so that we can start negotiations with the Canadian side to finalize the same. Now the big question is if concerned authorities in Dhaka are listening to our repeated pleas and are convinced about the need and importance of concluding a FIPA with Canada.

Thoppil also took note of the initiative being taken by the High Commission to host a Business Summit (along with/without a trade fair) in Toronto in the first quarter of this year in collaboration with the Ontario Chamber of Commerce and other concerned business bodies and business promotion agencies in Canada, including the Asia-Pacific Foundation, to strengthen and expand our trade relations as well as to attract Canadian investment. There too, the issue of existence of FIPA with Canada would come up when there would be direct business to business discussion with potential Canadian investors. The third reason is the new leadership in the Ministries of Commerce and Industries.

While I am thrilled to see the new cabinet and like to sincerely thank the Hon’ble Prime Minister for presenting the nation such a seemingly “Smart” and to be effective and performing cabinet, I am also happy to see the new leader in the Ministry of Commerce. As I knew him from his Bangkok days, he is likely to be very dynamic and forward-looking young, energetic and explorative leader, while being so humble and down to earth. In response to my congratulatory message, he was kind enough to call me back within a few hours of his swearing-in. He was so keen to know our priorities with Canada and we had some brief discussion on such issues. I also briefed him about my meeting the day before with the new President of FBCCI and requested him to involve them in all trade and investment related issues with Canada. I was so happy that he appreciated all this and assured me of all the support from his ministry.

In view of the above and given my experience in Canada and that in the Ministry of Foreign Affairs, Dhaka as in charge of the Wing called “Trade, Investment and Technology”, I recommend the following not only for boosting trade and investment relation with Canada, but also to pursue “Economic Diplomacy” in effective and practical manners with all countries in the world:

1. The way Bangladesh Investment Development Authority (BIDA) functions and its approach to attracting foreign investment, needs to be relooked and reconsidered given specific needs and expectations of major investors. BIDA should also consider developing country specific investment strategy in consultation with concerned authorities and private sector in Dhaka and respective Missions abroad. Same should apply for Security Exchange Commission for attracting investment in financial sector. Organizing unplanned “Road-Shows” abroad without any achievable targets and spending huge amount of resources in foreign countries would not yield any desired results. Similarly, unplanned visit of high officials without involving the host country and the concerned Mission abroad is mere wastage of precious foreign currencies as they do not produce any result at all. Two visits by a former minister in last three years to Canada without involving the host country and the Mission are stark examples of such costly yet useless and unproductive visits.
2. The pace in which Ministry of Industries has been dealing with FIPA with Canada, is utterly disappointing. There has not been any official response to our repeated communications requesting to speed up the process of drafting the FIPA with Canada. The question of which government 3 authority should be in charge of FIPA also deserves reconsideration. Given BIDA’s responsibility or trade related aspects of investment being under Ministry of Commerce, the issue of which ministry should be the focal int for FIPA deserves redetermination.
3. Ministry of Commerce/EPB needs to strategize their approach when it comes to working in collaboration with the Missions to boost and diverse trade. It is regrettable that often they unilaterally contact dubious so-called trade related organizations in Canada which are under the scanner of the government of Canada. This only happens due to their personal contact with such dubious organizations and people associated with it. Despite Mission’s advice and observation, they try to keep contacting with such organization. This puts huge question mark on the credibility of the government and the Mission vis-à-vis the host country as they have reservations on such Canada based organizations. This kind of issue should be investigated by Commerce Ministry and other authorities. Concerned authorities in Dhaka need to appreciate that without Mission’s involvement, no effective cooperation can be materialized with a country like Canada.
4. It is also equally important to assess the performance of the newly established Wing “Trade, Investment and Technology” in the Ministry of Foreign Affairs. It was a newly established wing when I was given charge of this Wing in 2018; moreover, it was the height of COVID-19 pandemic. Yet, the outreach efforts of the wing to work with all the investment authorities and ministries were completed and Missions abroad were also engaged to a greater extent in trade and investment promotion activities. If MoFA wishes to lead the efforts for “Economic Diplomacy”, the wing needs to be redesigned and manned with skilled personnel. In last three years, I have not seen any directive and guidelines from this Wing at least for this Mission; nor were we asked to report on our performance on pursuing economic diplomacy. It is very important for MoFA, for the government and for the country to strengthen and expand significantly the scope of work of this very important wing, if it is serious to lead the efforts to pursue effective economic diplomacy. MoFA also needs to focus on the work of such an important wing, rather than benefit of any specific person. It is definitely not productive to have a secretary level position for dealing with only maritime issues rather than having a secretary level position for leading our efforts to pursue economic diplomacy. With the demarcation of our maritime boundary with India and Myanmar, our focus now should be reaping the economic benefits from our seas in the context of our Indo-Pacific Outlook. I am of the strong view that the Trade, Investment and Technology Wing in the Ministry of Foreign Affairs should be headed by a secretary level officer and the wing should also be strengthened, expanded and well resourced. Even MoFA should consider bringing officers from concerned ministries/authorities to man and work this wing.
5. Lastly, I would like to bring perhaps the most important issue that affects our efforts in boosting trade and investment, to the fore. The implementation of the “One Mission One Country Policy” as agreed at a meeting of secretaries held in PATC, Savar end of 2020, where it was agreed that the commerce and economic officers working in the Missions should be working under the direct control of the Head of Mission, is of paramount importance for boosting trade and investment relation with any country. I am happy and proud that Ottawa Mission should be the best example for full implementation of the policy. I thank the commerce secretary for all the support to the Mission to lead our trade related works in unison in this regard. Despite all this, direct reporting by the commerce and economic officers in Missions to their parent ministries is still a problem and some of the practice to guide these officers by commerce ministry is often counterproductive and creates confusion and misunderstanding. In my view, the most productive way for implementation of the “One Mission One Country Policy” is to budget and fund all these posts from the Ministry of Foreign Affairs, since resources from all the ministries come from one government. Officers with specialization in trade and investment from any ministry can be selected and deputed to foreign ministry for orientation, further training and to work for a few months to a year before they are posted our as commerce and economic officers by foreign ministry like their other officers. Once on posting they should report to the Secretary in charge of Trade, Investment and Technology Wing in the Foreign Ministry through their Heads of Mission while keeping all the concerned ministries and authorities in the government duly informed. This norm and discipline is warranted to ensure effective pursuing of economic diplomacy. 4 Given my experience in Canada and elsewhere in other Missions, under the current practice, these officers usually need an extended period of time to feel comfortable and get used to work with their counterparts in the host countries for several reasons, including due to their discomfort and hesitation do so freely. It affects not only personal performance of the officer concerned, but also that of the Mission and its overall efforts to boost trade and investment relations with the host country. This can only be allayed if a structured system is devised in which these officers would spend required amount of time in foreign ministry to receive additional training, orientation and work experience before they are posted out. It is pertinent to add that this is the practice in India (as I knew when I was posted in our High Commission in New Delhi in 1990s). It is also important to know that foreign trade is integral part of the Ministry of Foreign Affairs of many countries, including Australia, Brazil, New Zealand and others.

I feel that in the greater interest of the country, our government should seriously consider the above issues especially those relating to structural reforms and inter-ministry coordination to pursue economic diplomacy in an effective and coherent manner. Since these reforms and coordination involve several ministries and authorities, the Hon’ble Private Industry and Investment Adviser of the Hon’ble Prime Minister may lead these proposed structural and coordination reforms as her representative.

In conclusion, given the fact that foreign direct investment in our country last year was significantly low for several reasons, including recently held elections, it is of paramount importance for us to attract foreign direct investment as much as possible. It would be foolish on our part to not make any efforts to conclude a FIPA with Canada if we are serious on attracting Canadian investment which can be in billions, given the huge opportunities for the same exist in Bangladesh and also given Canada’s current relations with some important countries in the region. It is indeed important for Bangladesh to demonstrate its seriousness to attract Canadian investment in Bangladesh by drafting a FIPA, if not finalizing it before the proposed visit of the Canadian trade delegation in April led by Canada’s Trade Representative for Asia and Pacific.

The writer is the High Commissioner of Bangladesh in Canada. He can be contacted at: [email protected]