Bangladesh should focus not on Free Trade Agreement (FTA) but on removal of non-trade barriers in terms of trade relationship with India. Speakers stressed so in a dialogue on Bangladesh-India Trade Relationship: New Opportunities, New Challenges on 2 August 2012 at BRAC Centre Inn organised by CPD in collaboration with The World Bank. Dr Sanjay Kathuria, Lead Country Economist, The World Bank and Dr Selim Raihan, Associate Professor, Department of Economics, University of Dhaka initiated the discussion by sharing the findings of the report titled Unlocking Bangladesh-India Trade: Emerging Issues, a World Bank Working Paper. Professor Dr Gowher Rizvi, International Affairs Advisor to the Hon’ble Prime Minister of Bangladesh was the Chief Guest of the session that was chaired by Dr Debapriya Bhattacharya, Distinguished Fellow, CPD.
The study showed that Bangladesh and India both would gain by opening up their markets to each other. The study revealed that a bilateral FTA would lift Bangladesh’s exports to India by nearly 134 per cent, but if transaction costs could also be reduced through improved connectivity, the export to India would increase by nearly 300 per cent. FTA would also raise India’s exports to Bangladesh. The report identified the challenges that exist in the areas of non-tariff measures/barriers in both the countries. These include excessive bureaucracy, weak trade facilitation and customs inefficiencies. The report suggested that an India-Bangladesh trade agreement covering both goods and services can enable even larger gain.
Discussants were skeptical about Bangladesh’s reaping any substantial benefit from FTA with India. Dr Md Mozibur Rahman, Chief Executive Officer, Bangladesh Foreign Trade Institute (BFTI) claimed that India would gain direct benefit to the tune of USD 3 billion if a transship arrangement is signed by Bangladesh, along with the provision of the facility for use of Chittagong and Mongla Ports, whereas Bangladesh will receive a maximum benefit of USD 500 million. Discussants apprehended that Bangladesh cannot afford a free trade zone with India at this moment as it may lead to creating more trade imbalance and unemployment in the country.
opposing such thought Dr Gowher Rizvi, opined that trade imbalance is not the major issue of concern. Bangladesh will have to prove itself to be an attractive place for the Indian investors so that they invest here and generate employment. Terming non-trade barriers as the major impediment of export to India, Dr Rizvi asserted that the government and economists have to identify the non-trade barriers for Bangladeshi exporters to India and take measures to remove those through dialogue with that country.
Special Guest of the session Commerce Secretary Mr Md Ghulam Hossain was critical of the roles Indian policymakers play regarding non-trade barriers which are too stringent for Bangladeshi exporters.
Summarizing the discussion, Dr Debapriya Bhattacharya underlined that instead of an FTA, Bangladesh needs a comprehensive framework agreement with India incorporating trade facilitation, investments, trade in services and infrastructure development.
Among others Dr M Osman Farruk, Former Education Minister and Member, Advisory Council of the Chairperson Bangladesh Nationalist Party (BNP); Ambassador Farooq Sobhan, Former Foreign Secretary; Ambassador Ashfaqur Rahman, Chairman, Centre for Foreign Affairs Studies; and Dr Mostafa Abid Khan, Joint Chief (International Cooperation Wing), Bangladesh Tariff Commission also spoke at the session.