After emerging as the fourth largest lender and a major source of funding for infrastructure projects, China now wants to expand bilateral trade with Bangladesh. Both countries have already expressed a keen interest in a free trade agreement (FTA).
Following a joint feasibility study on Sino-Bangla FTA that began back in 2016, China recently sent a draft Memorandum of Understanding (MoU) in this regard. The commerce ministry later discussed the draft MoU from June 25 to June 27 in an inter-ministerial meeting.
The draft MoU, a copy of which has been obtained by The Business Post, reveals that the parties are in agreement on improving bilateral, economic, and trade cooperation, and deepening the China-Bangladesh strategic cooperative partnership.
Bangladesh is expecting an official announcement of the start of negotiations on a FTA with China during the Prime Minister Sheikh Hasina’s upcoming visit to China from July 8 to 11.
Commerce Minister Ahsanul Islam Titu had recently said, “Our ministry has already sent a proposal to the foreign affairs ministry to include the FTA issue as part of their discussion agenda.
“Bangladesh is trying to make trade agreements with major partners, including China, to retain tariff benefits even after transitioning from LDC status.”
Speaking to The Business Post, Research and Policy Integration for Development (RAPID) Chairman Mohammad Abdur Razzaque said, “While an FTA is beneficial, Bangladesh should also pursue an investment agreement with China to attract Chinese investment.
“This would enable us to export manufactured products globally, including to China.”
“As China is the largest supplier globally, less than full reciprocity is preferable. Additionally, we have an opportunity to collaborate on technology, and integrate into their supply chain, which would be advantageous for us.”
What’s in the MoU?
The joint feasibility study of China-Bangladesh FTA started in October, 2016, and has since been completed. The parties agreed to have further communication, and endeavour to launch FTA negotiation at an early date.
Bangladesh is expected to facilitate the process of exporting mango and other featured agriculture products to China, and Bangladesh requested China to increase imports of Bangladeshi products such as jute, leather, and aquatic and marine products.
China is willing to work together with Bangladesh to increase its exports of high-quality and featured products.
The Parties agreed to make good use of international exhibition platforms such as expos, international fair for trade in services, economy expo and relevant Chinese e-commerce platforms to enhance the visibility of Bangladeshi high-quality products in the Chinese market and promote them to other countries.
The parties are willing to provide convenience and support for enterprises of the two countries to hold and participate in exhibitions in each other's country.
China is also willing to guide the business associations of the two counties to strengthen exchange on cooperation in the above-mentioned fields, and organise relevant industrial cooperation forums, seminars, matchmaking activities.
This friendly nation supports the construction of economic and trade exchange and cooperation mechanisms between relevant Bangladeshi and Chinese local governments to help the development of Bangladeshi advantageous industries.
FTA Wing Deputy Secretary Md Firoj Uddin Ahmed, operating under the commerce ministry, said, “China is keen to increase business and investment in Bangladesh. Therefore, the draft MoU received from China has been thoroughly reviewed.”
Businessmen expressing enthusiasm
The trade promotion activities will be coordinated by the economic and commercial counsellors from both parties in diplomatic missions to each other's countries.
Representatives of relevant entities such as chambers of commerce and industries have been invited to participate in the discussions set to take place during Prime Minister Sheikh Hasina’s Beijing visit.
For the first time, 200 businessmen will join the state visit.
Bangladesh China Chamber of Commerce and Industry (BCCCI) General Secretary Al Mamun Mridha said, “The top business community of the two countries will meet in China. Businesses are really excited about it. This is also a festival for businesses in both countries.”
It is known that 70 members of the BCCCI are participating in this state visit. Besides, 80 businessmen are participating under the leadership of Federation of Bangladesh Chambers of Commerce & Industries (FBCCI) President Mahbubul Alam.
Besides, Bangladesh Securities And Exchange Commission (BSEC) and Bangladesh Investment Development Authority (BIDA) officials are participating as well.
On the other hand, the Bangladesh Business, Trade and Investment Summit – which is scheduled to be held at Beijing on July 9 – will be attended by around 800 top Chinese businessmen.
Both countries to benefit
On Thursday, State Minister for Power, Energy, and Mineral Resources Nasrul Hamid said, “Seven major energy and power-related memorandums of understanding (MoUs) are likely to be finalised and signed during Prime Minister Sheikh Hasina’s upcoming China visit.
He revealed that discussions with China have been ongoing regarding investments in these projects on a government-to-government (G2G) basis.
"If China agrees during the prime minister's visit, a MoU may be signed," Nasrul told reporters at a press conference at the Bangladesh Secretariat in the capital. The proposed projects are estimated to cost around $1 billion, he added.
Note that, following President Xi Jinping's 2016 visit, during which he pledged nearly $20 billion in loan assistance, Chinese loans have surged, exceeding $1 billion annually in recent years.
On the issue, former Bangladesh ambassador to China Munshi Faiz Ahmad said, “Due to the current economic crisis, the Bangladesh government is actively seeking loans from different countries, including India. Efforts are also underway to secure loans from China.
“Additionally, the government has taken some measures in fiscal management, although they may not be sufficient.”
The outcome of trade promotion cooperation and issues experienced in implementing between the parties will be reported to the joint committee of the two counties for economic and trade cooperation.
Any dispute arising in connection with the interpretation or implementation of this MoU will be settled amicably through consultations or negotiations between the parties.
This MoU will come into effect on the date of its signature. If one of the parties informs its termination in written notification to the other party, this MoU will be considered as terminated two months after the party receives the said notification.
Teesta, Rohingya issue to be discussed
Additionally, the Teesta river sharing agreement between Bangladesh and India is expected to be discussed in the meeting as well. China has shown a particular interest in this project, although India has also expressed interest.
Discussing the Teesta water-sharing dispute, Munshi Faiz Ahmad said, “China believes both countries can work together. However, India thinks they should handle everything.
“India was initially approached for the Teesta project, but they showed no interest. When China became interested, India stepped forward. India believes that China uses project implementation as a way to monitor them, but China does not use these projects for surveillance.”
Sources from the ministries also indicate that Bangladesh will seek China's cooperation on the repatriation of Rohingyas who fled from Myanmar.
Regarding the Rohingya issue, the former ambassador said, “It is difficult to predict progress on the Rohingya issue in this meeting. China says they will assist, and will probably reiterate this in the meeting.
“However, it is unclear to what extent they will help. China will need to show some level of success. It will be otherwise seen as a diplomatic failure, which they certainly want to avoid.”
