Dhaka and New Delhi are preparing a joint study report to sign a comprehensive economic partnership agreement (CEPA) to boost bilateral trade and investment once Bangladesh becomes a developing nation.
The government has taken the initiative to ink the deal to safeguard duty privileges in international trade after the country graduates from the grouping of the least-developed country (LDC) in 2024.
Bangladesh Foreign Trade Institute (BFTI) and Indian Foreign Trade Institute are preparing the study report, said Commerce Secretary Md Jafar Uddin.
Ali Ahmed, chief executive officer of the BFTI, said, "I hope the BFTI will be able to finalise the draft of the CEPA negotiation by the next two weeks."
The draft was supposed to have been complete a few months ago but the coronavirus pandemic has delayed the preparation, he said.
"The CEPA is a very comprehensive subject matter and needs a lot of analysis," he said.
Bangladesh is set to lose duty preferences in international trade after the graduation, which prompted Dhaka to start the process to strike free trade agreements (FTAs), preferential trade agreements (PTA), CEPA and other trade arrangements with trading partners.
Last month, Bangladesh and Bhutan signed a PTA, the first such deal for Bangladesh.
The commerce ministry is working to sign FTAs or PTAs with 11 more countries and trade blocs to enjoy trade benefit after graduation.
"Both Bangladesh and Nepal are ready to sign a PTA," Jafar said.
The government plans to sign the CEPA with some selective countries.
The CEPA is a bit different from FTAs as it covers a lot of issues such as trade in goods and services, investment, intellectual property rights and e-commerce, said Jafar.
"Only signing FTA or PTA with India will not be enough as it is a big economy. Besides, India has a big investment in different sectors in Bangladesh. So, Bangladesh needs to sign the CEPA with India," the secretary said.
Bangladesh enjoys duty facility in Indian markets under a South Asian Free Trade Agreement.
Both countries agreed to sign the CEPA during a secretary-level meeting last year.
In September 2018, Indian Commerce Minister Suresh Prabhu and his Bangladeshi counterpart Tofail Ahmed said at a joint press conference that the two sides would sign the CEPA.
Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, said Bangladesh should include some important issues like trade and market access of goods and services in the CEPA negotiation.
The issues of the investment agreement, development of production network, value chain and mutual recognition of standards and certification should be incorporated so that more goods and services can be traded, the trade expert said.
The transport agreement, the rules of origin, customs clearance, border crossing and logistics should also be prioritised in the negotiation with India, he said.
Bangladesh and India can also include the environmental and labour standards in the CEPA negotiation.
Some outstanding issues like Indian anti-dumping duty on Bangladeshi jute and jute goods, countervailing duty on garment shipment, new customs rules and a lot of non-tariff barriers have been acting as deterrents to increasing the bilateral trade.
The Indian government has allowed Bangladesh the duty-free access on all products, except for 25 alcoholic and beverage items in 2011. However, the export from Bangladesh has not increased to an expected level because of non-tariff barriers.
Bangladesh exported goods worth $1.09 billion to India and imported $5.77 billion worth of goods in 2019-20.
The government has initiated a negotiation with the headquarters of the Association of Southeast Asian Nations (Asean) to sign a regional trade agreement (RTA) so that Bangladesh can grab more markets in the rising Asian and East Asian markets.
"If we can sign the RTA with the Asean, we will not need to sign any trade deal with the members of the bloc separately," Jafar said.
The government is working to improve the labour standards as per the requirement of the European Union to retain the generalised system of preferences (GSP) in the bloc.
The EU has urged Bangladesh to improve labour standards for the continuation of the GSP. The bloc will review the current GSP in 2023.
Bangladesh's GSP status to the EU will end in 2024. The EU, however, will continue the same GSP up to 2027 under a three-year grace period.
The commerce, foreign and labour secretaries are working together to improve labour standards, Jafar said.
Last week, the bureaucrat held a meeting with the officials of the UN Committee for Development Policy and demanded two more years as the transition period.
"We have demanded a transition period for up to 2026 as our economy has been severely affected by the fallouts of the Covid-19," he said.