On December 6, Bangladesh signed a preferential trade agreement (PTA) with Bhutan to expand bilateral trade between the two countries. This is the first official preferential trade agreement Bangladesh has signed with any country since its independence in 1971.
According to the Dhaka Tribune, some 100 Bangladeshi products will get duty-free access to Bhutan, including baby clothes and clothing accessories, men’s trousers, shorts, agricultural products, and electronics. Meanwhile, 34 Bhutanese products including oranges, apples, ginger, etc will get duty-free access to the Bangladeshi market. In other words, a new horizon has opened in the development of economic relations between Bangladesh and Bhutan. Undoubtedly, this agreement will provide a significant boost to both nations.
In many ways, this agreement is quite befitting and a milestone. Firstly, Bhutan occupies a special place when it comes to Bangladesh. On December 6, 1971, Bhutan first recognized Bangladesh as an independent and sovereign state, thereby also marking 49 years of diplomatic relations between the two nations.
Bangladesh and Bhutan are also members of the South Asian Association for Regional Cooperation (SAARC). Prime Minister Sheikh Hasina has termed the link between the two countries as “very ancient.” On the other hand, Bhutanese Prime Minister Dr Lotay Tshering in his speech termed Bangladesh as his “second home” by saying: “Bangladesh is always very close to my heart.” Considering the bilateral relations, our relationship with Bhutan is today anchored on goodwill, understanding, and cooperation.
According to the Export Promotion Bureau, trade between the two countries in 2018-2019 was $57.90 million, and under the South Asian Free Trade Area (SAFTA), Bangladesh and Bhutan have already enjoyed some trade benefits. Bangladesh is also Bhutan’s second-largest export market. However, as a result of PTA, its coverage will increase further.
Bhutan is ahead of Bangladesh in terms of exports -- our exports to Bhutan are low. According to the Bangladesh Bank and the Export Promotion Bureau (EPB), the bilateral trade volume of the two countries was just $12.77m in the fiscal year 2008-09, with Bangladesh’s exports to Bhutan amounting to just $0.61m while it imported goods worth $12.16m.
Bangladesh will be upgraded from a least developed country (LDC) to a developing country in 2024. Then all kinds of tariff facilities will be closed and new conditions may be added to the export market.
As a result, Bangladesh has to face new challenges. Bangladesh needs to adopt new approaches to be able to deal with potential risks. In this case, bilateral trade agreements with different countries may be the most effective step to keep exports normal.
Vietnam can be an example for us. Vietnam is the main competitor of Bangladesh in the RMG market. Vietnam has free trade agreements (FTAs) with various countries, including the United States, the largest market for RMG. If Vietnam’s free trade agreement (FTA) with the European Union comes into force, they will be in an even more advantageous position.
Most investors in Vietnam are from China or Hong Kong. Vietnam is getting the benefit of this quite well. So, we need to sign more PTAs with economically powerful countries, including Malaysia and Indonesia.
In a recent interview with the national news agency BSS, Dhaka Chamber of Commerce & Industry (DCCI) President Shams Mahmud said: “The signing of PTA with Bhutan would help explore further the potentials of the country’s real estate, ICT, and light engineering sectors. Based on this PTA, we’ll have to make an analysis and thus strike more PTAs and FTAs with countries like Nepal, Malaysia, and Indonesia,” adding that those should be formulated and done in a scientific way.
To increase capacity, the government must continue to move to regional blocs like ASEAN. Bangladesh will be able to enter the Australian and Latin American markets with products like RMG through such trade agreements.
As Bangladesh continues to make economic progress, more needs to be done strategically. It means that not only signing agreements but also effective implementation of these agreements remains crucial.
Besides signing free trade agreements with different countries, it is necessary to emphasize on their implementation.
Md Jahid Hashan is a graduate of political science.