Trade with Bhutan doubles after preferential trade agreement
Bilateral trade between Bangladesh and Bhutan doubled to $22.1 million in the fiscal year 2022-23, following the implementation of a preferential trade agreement (PTA) in 2022.
Bangladesh, which does not have a free trade agreement (FTA) with any country, signed its first PTA with Bhutan, the implementation of which has already yielded positive results, officials concerned said.
Bangladesh's exports to Bhutan never exceeded $10 million before the PTA, which reached $9.5 million in FY22.
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Economists say given the success of the PTA with Bhutan, Bangladesh can now utilise its experience to establish similar agreements with other countries.
Centre for Policy Dialogue Research Director Khondaker Golam Moazzem told TBS, "Agreements of this nature are a necessity in today's world. Businesses have been able to utilise the numerous advantages they offer."
Mentioning that Bangladesh will transition from a least developed country to a developing one in 2026, he said, "Consequently, Bangladesh will lose some of the trade benefits it currently enjoys as an LDC from developed and developing nations. To address this situation, Bangladesh should prioritise FTA and PTA agreements with its neighbouring countries."
PTA with Bhutan
After extensive negotiations with Bhutan, the PTA was signed on 6 December 2020. The agreement came into effect on 1 July 2022.
Under the PTA, 100 local products from Bangladesh are enjoying duty-free access to the Bhutanese market. Bhutan, on the other hand, has duty-free access to 34 products in Bangladesh. Subsequently, Bangladesh extended duty-free access to an additional 16 Bhutanese products.
In an order issued on 4 August 2022, the Internal Resources Division of the Ministry of Finance clarified that no customs duty or tax will be levied on the import of the 34 initial and 16 additional products from Bhutan.
Officials said since 2010, Bangladesh had been providing duty-free market access to 18 products from Bhutan. Conversely, Bangladesh used to enjoy duty-free market access for 90 of its products in Bhutan.
Bangladesh's duty-free products include ready-made garments, processed food products such as juices, condensed milk, biscuits, agricultural products such as potatoes, cosmetics, toiletries products such as soap and shampoo, dried fish, cement, tea, plywood and light engineering products.
Apart from this, duty-free facilities exist for the export of men's jackets, blazers, trousers, chocolates, various types of plastic products and goods, leather and leather products, jute and jute products, aluminium doors, footwear, cables and watches.
On the other hand, Bhutan enjoys duty-free benefits on items like boulders, vegetables and fruits, minerals, construction materials, chemicals, gypsum, dolomite, fruits and juices, processed foods such as jams and jellies, spices and furniture.
Bangladesh's bilateral agreement with Bhutan has been a unique test case, in operation for over two years now. The government and businesses have gained valuable experience and insights during this time. Various observations have emerged regarding potential opportunities and challenges.
Experts see the first PTA experience to help negotiate other such deals
Moazzem, also a prominent industrial economist, said, "Bangladesh's bilateral agreement with Bhutan has been a unique test case, in operation for over two years now. The government and businesses have gained valuable experience and insights during this time. Various observations have emerged regarding potential opportunities and challenges."
He went on to say, "In light of these developments, the government could convene an evaluation meeting with various stakeholders to assess the PTA's performance. The learnings from this evaluation could be applied to any future trade agreements with Nepal, Sri Lanka, or India.
PRAN-RFL Group Assistant General Manager (Export) Asit Kumar Kundu told TBS, "Our fruit juices are performing well in the Bhutanese market under the PTA, competing favourably with Indian products. Prior to the implementation of the PTA, Bangladeshi products struggled to keep pace with Indian goods."
However, he said, "We are lagging behind in the export of certain products, such as carbohydrate drinks and confectioneries, due to local tariffs imposed by Bhutan. Government initiatives are also needed in this area. Overall, we are able to improve our imports and exports thanks to the PTA. We can also easily import lemons from Bhutan."
