Dhaka to re-assess benefits of FTA accord with Ankara

Financial Express | 06 January 2013

Dhaka to re-assess benefits of FTA accord with Ankara

Three-member committee formed

by Syful Islam

Bangladesh has decided to re-assess the necessity and possible benefits of signing a Free Trade Area (FTA) accord with Turkey, official sources said.

A three-member committee was formed Thursday last to examine how beneficial it will be for Bangladesh if it strikes the deal with Turkey since only one product- the apparel export- is facing tariff competition there.

The bilateral relations between the two Muslim countries have become ’sour’ following request of Turkish president Abdullah Gul last month for ’clemency’ to the accused under trial in the International Crimes Tribunal for the ’sake of peace in the society’.

Dhaka has outright rejected Ankara’s request and termed it unacceptable and clear interference in the country’s internal affairs.

Officials said, the ministry of commerce (MoC) convened an inter-ministerial meeting on Thursday last to decide on a template prepared by the Bangladesh Tariff Commission (BTC) on signing of FTA with Turkey.

Participants said, the meeting got less importance and was chaired by additional secretary Amitabh Chakravarty, who is director general of World Trade Center (WTO) cell of the MoC, in place of secretary Mahbub Ahmed. Chakravarty even could not spend his full time at the meeting because of his other engagements.

Bangladesh had moved forward to strike the FTA deal with Turkey after Ankara in last July imposed 17 per cent additional duty on apparel item of least developed countries (LDCs). Export of garments made by the LDCs was enjoying zero-duty facilities in that country’s market.

Alongside LDC-made apparel, Turkey also imposed 36 per cent duty on garments produced by developing countries and 42 per cent on apparels manufactured by developed countries.

Following imposition of additional duty, Bangladesh’s apparel export to Turkey has been facing tough competition. During the July-September period of fiscal year (FY) 2012-13, apparel export to Turkey came down to US$ 90.72 million marking a 9.21 per cent fall compared to same period of the previous fiscal year.

As an impact of paying the additional duty, apparel export to Turkey came down to $355.93 million in FY 2011-12 from $518.32 million in FY 2010-11, which saw a robust 69.24 per cent growth against the apparel product shipment worth $306.27 million in FY 2009-10.

Apparel products account for over 75 per cent of Bangladesh’s total exports to Turkey. Imposition of the duty on apparel export also brought down significantly Bangladesh’s total export there to $552 million in FY 2011-12 from $724 million in FY 2010-11.

Prime Minister Sheikh Hasina visited Turkey in April last year when she also discussed the additional duty issue with her counterpart. After her Ankara visit, the Prime Minister’s Office (PMO) asked the MoC to go forward for signing FTA with the Eurasian country to further boost trade and investment between the two countries.

A senior MoC official said Bangladesh’s apparel export to Turkey is still in an advantageous position compared to its major competitors. He said LDC goods still enjoy 19.6 per cent preference margin against developing countries and 25 per cent against developed countries including China against earlier 9.6 per cent and 12 per cent respectively.

He also said, Turkey is a member of the European Union and Bangladesh’s export there has been enjoying duty-free access facility under the ’Everything but Arms’ (EBA) scheme.

"Signing FTA won’t bring any benefit for Bangladesh and I don’t see any necessity of signing the deal with Turkey," he added.

Commerce secretary Mahbub Ahmed told the FE Friday that a committee has been tasked to examine the suggestions that have come from different quarters, and check the technical issues whether signing of FTA would be beneficial for Bangladesh.

"Unless the FTA brings any benefit for us, we won’t go for it," he said.

Officials said, the template, prepared by the BTC, kept provisions for movement of natural persons, mutual recognition arrangement, and flexibility for the least developed party.

The template incorporated the provision of ’movement of natural persons’ under the Mode-Four (IV) of the World Trade Organisation (WTO). It also sought special and differential treatment for the products of Bangladesh to the Turkish market under the proposed deal.

It also proposed inclusion of issues like socio-economic development, strengthening of economic competitiveness, upgradation of human resource development and promotion of sustainable economic development within the broad areas for economic cooperation under the proposed trade deal.

Furthermore, Dhaka has attached importance to progressively liberalise the investment regime, take necessary measures for protection of investment, grant the most-favoured nation treatment, follow a positive list approach and adopt measures against any fraudulent activity under the proposed bilateral FTA.

The 10 areas included in the templates for cooperation are jute, construction, electronic commerce, collaboration in SME development, tourism, energy, fisheries, infrastructure development in the sea ports and waste disposal.

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