Bangladesh and Bhutan on Tuesday finalised the terms and conditions to sign a Preferential Trade Agreement (PTA) to increase trade between the two countries.
“We have reached agreement to sign a PTA, not the Free Trade Agreement (FTA),” said Sharifa Khan, additional secretary to the commerce ministry.
Under the PTA some selected goods enjoy duty benefits of both countries. On the other hand, under the FTA almost all goods enjoy duty benefits of both countries, as a result both countries will lose revenue from import and export.
“So, we are not preferring to sign FTA but PTA, also to protect our domestic industries,” said Sharifa Khan.
For instance, Bangladesh is not interested to sign FTA with China because the government earns nearly Tk 25,000 crore as duty on import of goods from China — worth $14 billion — in a year.
So, if the government signs FTA with China, it will lose this big amount of revenue. Currently, China is the largest trading partner of Bangladesh.
“As per our discussion through video conferencing, the officials of both Bangladesh and Bhutan agreed to make the PTA functional from August 30 this year,” Sharifa Khan, who led Bangladesh in the video conferencing, also said.
The law ministries of both countries are vetting the documents now, she said, adding that the documents were supposed to be finalised in March this year, but it was delayed due to coronavirus pandemic.
Bhutan has agreed to provide duty benefit on exports of 100 different goods including garment, agricultural processing goods and electronics goods from Bangladesh, while Bangladesh agreed to provide duty benefit to 34 Bhutanese products including fruits, Sharifa Khan said.
The additional secretary also said negotiation is underway to sign PTAs with Indonesia and Nepal soon.
Last month, China granted duty-free benefit to 97 percent Bangladeshi-origin export items, both bilaterally and under the Asia Pacific Trade Agreement (APTA), said Sharifa Khan.
The Chinese move will help increase the shipments of new products like pharmaceuticals and some non-traditional items from Bangladesh.
Chinese tariff rates are very high compared to Europe and the US, two main export destinations for Bangladesh.
