Published in New Age on Saturday, 10 May 2014.
DUTY-FREE ACCESS FOR 7800 ITEMS, JOINING ASEAN
Dhaka unlikely to accept China, Japan offers
Nazmul Ahsan
Dhaka is unlikely to accept two separate offers from China and Japan on trade and investment, apprehending the proposals from the world’s two largest economies would hurt the country’s revenue and export interests badly.
Last week, Japan formally approached Dhaka to become a member of ASEAN, while China offered to provide duty-free market access for 7800 products from Bangladesh to its market with enhanced value addition criteria, senior officials at the commerce ministry said.
The items will make up 95 per cent of China’s tariff line.
The Chinese offer, however, said the proposed duty-free treatment could be availed of only after Dhaka becomes ready to forego the trade privilege currently available for around 4800 products of Bangladesh under the Asia Pacific Trade Agreement or APTA.
Bangladesh has been enjoying zero-duty facility for 4800 items in Chinese market since July, 2010, which accounts for 60 per cent of China’s tariff line. The value addition criteria for availing of the facility have been 35 per cent, a trade official said.
Senior commerce ministry officials after a quick review of the offers of China and Japan are of the opinion that the country’s export and revenue fronts would be affected badly by the apparently lucrative trade-related offers from the two giant economies.
‘Our position on the offers stands negative from the perspective of revenue and export earning as the country’s yearly earnings from vehicles and other home appliances imported from Japan was around Tk 2,300 crore from import duties and taxes, which would not be in place under the AFTA free trade arrangement within the purview of ASEAN,’ a senior trade official said.
He said the offer from China would turn out to be ‘sour’ for exporters as the proposed offer entails a minimum 40 per cent value addition to become eligible for duty-free facility, which is 35 per cent under the APTA arrangement.
China in its proposal sought Dhaka’s consent before prime minister Sheikh Hasina visits Beijing next month to attend the Second China-South Asia Exposition. During her visit, the 13th joint economic commission meeting between the two counties would also take place where the Chinese government expects to sign an exchange letter on the new offer, trade officials said.
Commerce secretary Mahbub Ahmed said the country could not afford a Chinese offer which might shrink Bangladesh’s current exports rather than expanding its trade in China.
‘I do not think we should come out of APTA,’ Mahbub told New Age on Thursday at his commerce ministry office.
Explaining, he said the country’s woven garment items could not add more than 30 to 35 per cent value, thus it would make the Chinese offer largely ineffective.
‘We are pushing for a reduction in the value addition criteria under the APTA from the existing 35 per cent to 30 per cent,’ the commerce secretary said, adding that the offer would be excellent for Bangladesh if China [agrees] to accept 35 per cent value addition…’
Bangladesh exported goods worth $ 458.12 million to China in 2012-2013 fiscal year against imports worth $6.30 billion. The woven and knit garment constitute the lion’s share of export from Bangladesh to China, according to figures of export promotion bureau.
The Japanese offer said Bangladesh could be well integrated with larger economies of the world and its exports and investments would be expanded if the country joins ASEAN. The offer also said Bangladesh might consider joining the ASEAN as an observer.
‘I think we should opt for the observer status of the Association of South East Asian Nations rather than joining the 10-member group right at the moment,’ Mahbub told New Age.
He, however, said a concrete decision on whether to join the ASEAN or AFTA (ASEAN Free Trade Area) would be taken after analysing the revenue perspective, export-import potential and employment opportunities.
Mustafizur Rahman, executive director of Centre for Policy Dialogue, said the government should thoroughly conduct a study on both ‘offensive’ and ‘defensive’ interests of the economy before joining ASEAN.
‘The [proposed] observer status in ASEAN will help the country to formulate strategies as the country will get a breathing space before joining the mighty economic club.’ Mustafiz told New Age.