Bangladesh to seal 1st preferential trade deal with Bhutan on Dec 6

In a landmark move, Bangladesh and Bhutan are going to sign a Preferential Trade Agreement (PTA) next month. 

All preparations have been made to sign the first PTA with Bhutan on December 6, said a commerce ministry high-up. The signing will take place through a virtual programme in the presence of Prime Minister Sheikh Hasina and her Bhutanese counterpart Lotte Shering.

In this regard, the law ministry has completed the verification and selection of the trade agreement to be signed between the two countries, said Commerce Secretary Dr Md Jafar Uddin.

Once the deal is signed, it will allow Bangladeshi goods duty and quota-free access to Bhutan and vice versa. According to the commerce ministry, the PTA will initially allow Bangladesh to export 100 products and Bhutan 34 products duty-free. 

The Bangladeshi products include, but are not limited to, jute and jute products, leather products and shoes, fans, dry cell batteries, watches, potatoes, condensed milk, cement, and toothbrushes. On the other hand, under the agreement, Bhutan will be able to export oranges, apples, ginger, fruit juice, stones, wood, limestone and other products to Bangladesh.

The two countries — both are also members of the South Asian Association of Regional Cooperation (Saarc) — will be able to increase the number of export items in phases.

After sealing the deal with Bhutan, PTAs will be signed with 11 more countries — India, China, Iran, Sri Lanka, Cambodia, Nepal, Indonesia, Malaysia, Saudi Arabia, the UAE and Turkey — in phases, hinted the commerce ministry official. 

Such agreements will increase domestic and foreign investment and create employment opportunities, added the official.

The bilateral trade agreements are important for Bangladesh since the country will graduate from the least developed country (LDC) status to a middle-income one in the next few years.

After graduation in 2024, Bangladesh is going to face a huge challenge as it will no longer enjoy tariff benefits available from the World Trade Organization (WTO), said sources in the commerce ministry.

Khandaker Golam Moazzem, research director of private think tank Centre for Policy Dialogue (CPD), said that PTAs and Free Trade Agreements (FTAs) are important in expanding exports among foreign countries. 

If Bangladesh wants to enjoy the zero-duty facility that it is now enjoying as an LDC, there is no alternative to signing FTAs with different countries, and the preparations should start now, he observed.

Commerce Minister Tipu Munshi told the Business Insider that Bangladesh has historical ties with Bhutan as it is the first country that recognised Bangladesh as an independent nation; Bhutan recognised Bangladesh as an independent country on December 6, 1971.

Prime Minister Sheikh Hasina showed personal interest in signing the agreement with Bhutan, so the PTA was approved at the cabinet meeting last September, said the minister. 

In the 2012-13 fiscal year, the trade volume between Bangladesh and Bhutan was about $26.52 million, which increased to $57.9 million in FY19.  

The bilateral trade agreements will open new possibilities for both countries, said experts, underscoring the need for such agreements with other countries as well.

Bangladesh is conducting trade with more than 200 countries around the world, as per data by the commerce ministry and the Bangladesh Tariff Commission.

But there is a trade deficit with 61 countries. Therefore, the government has started initiating the trade agreements to trim down the deficit, said the government agencies concerned.