Sri Lanka and Bangladesh should sign FTA

Prime Minister Mahinda Rajapaksa with Bangladesh’s Prime Minister Sheikh Hasina

www.eurasiareview.com: Sri Lanka and Bangladesh should set up a Free Trade Agreement as soon as possible for ensuring their own business interest.  Sri Lanka and Bangladesh as South Asian countries share some common economic platforms. 

Sri Lanka and Bangladesh were parties to the SAARC Preferential Trading Arrangement (SAPTA), South Asian Free Trade Area (SAFTA). The two countries were also parties of Global System of Trade Preference (GSTP), Asia – Pacific Trade Agreement (APTA), and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).

But Sri Lanka and Bangladesh both need a bilateral Preferential Trade Agreement (PTA) to boost up trade and connectivity for ensuring greater mutual interest. This will be big bilateral progress towards trade and investment between the countries

Bangladesh has always expressed its keen interest to sign a free trade agreement (FTA) with Colombo to exploit the huge potential of bilateral trade between Bangladesh and Sri Lanka. If signing the FTA takes a long time, the two nations will sign a preferential trade agreement (PTA). 

The PTA will begin with a shortlist of products that could open up opportunities for expanded trade, investment, and tourism in the future. But at first Bangladesh and Sri Lanka can sign a preferential trade agreement initially to tap the untapped potentials. Bangladesh and Bhutan signed a PTA on 6 December, 2020. Now Bhutan and Bangladesh both are benefitting from the PTA.

The two countries should emphasise utilising the huge trade potential between the two countries by signing a bilateral trade agreement. Both parties can increase cooperation in various fields including pharmaceuticals, IT, agriculture, maritime security, and disaster management. Bangladesh has already expressed keen interest to provide training to Sri Lankan nationals in the field of paddy production, climate adaption, disaster management, and information technology and urged Colombo to extend training programs for Bangladeshis on marine fisheries and nursing.

According to 2019 data of the Export Promotion Bureau, the annual trade volume between Bangladesh and Sri Lanka is about $13 crore. Of this, Sri Lanka exports goods worth $9.86 crore while Bangladesh’s exports amount to about $3.7 crore. This trade volume could be increased easily if Sri Lanka and Bangladesh sign a trade agreement as soon as possible. Sri Lankan investors can invest more in our special economic zones, industrial parks, and high-tech parks.

Bangladesh can share with Sri Lanka its experiences in agriculture, particularly in rice farming and freshwater fisheries, its experiences in emergency response, disaster management, climate adaptation, and mitigation. Bangladesh can obtain technical know-how from Sri Lanka in coastal, aquaculture, marine culture, and deep-sea fishing. In the education sector, both countries should have more institutionalised cooperation in capacity building, vocational training, and skill development.

In the case of the health sector, Bangladesh can put emphasis on core training of Bangladeshi nurses and other health professionals in Sri Lanka. Sri Lanka may benefit immensely by importing our world-class pharmaceutical products and medical devices in greater quantities. Basically, Bangladesh and Sri Lanka both would benefit from sharing experiences in the fields of agriculture, health, and education for mutual benefit.

Bangladesh is moving forward on the path of rapid development. Sri Lanka should sign a trade agreement for ensuring its maximum business interest. Bangladesh produces garments, pharmaceuticals, cement, paper, electrical items, and jute goods, which are high in demand in Sri Lanka.

Bangladesh and Sri Lanka should identify potential investment sectors, including the areas of information technology, agriculture, health, education, tourism, and services to tap the untapped potentials. The investors of the two countries should come forward to exchange experiences of the development trend in the respective countries in the days to come.

FTA negotiations with Bangladesh have been in the works since 2013 and signing an FTA would mean successful completion of this discussion. It is expected that the FTA will enable both countries to overcome tariff and non-tariff barriers that exist and therefore hamper trade between the two countries.

Signing PTAs and FTAs (free trade agreements) would help both Bangladesh and Sri Lanka to address the challenges in the trade sectors. The preferential trade deals will help boost exports significantly. Bangladesh also needs to sign several PTAs and FTAs before (Bangladesh’s) graduation, to reap benefits of the least-developed country category. Earlier, Both Bangladesh and Sri Lanka already agreed to sign the deal.

In 2017, both the countries had finished the required preparations to sign a free trade agreement (FTA) – but the initiatives did not see the light of the day due to internal issues. Currently, both should give priority to PTAs. To some extent, the FTA deal is very difficult. Some issues, including revenue losses, have been involved with FTAs as all products of both the countries under FTAs enjoy duty-free facilities. 

Bangladesh and Sri Lanka signed six Memoranda of Understanding (MoUs) to increase bilateral cooperation between the two South Asian countries. Now it is high for Sri Lanka and Bangladesh should sign a PTA as soon as possible to tap the potentials. Then Bangladesh and Sri Lanka can move the path of FTA. 

Sri Lanka is in an advantageous position in the value-added apparel industry, shipping lines and deep-sea port, financial services, ICT, and skilled technical people in different sectors. On the other hand, Bangladesh enjoys advantages in the apparel sector, skilled workforce in the garment sector, agricultural products, processed foods, and migrant workers. Bangladesh would be immensely benefited if the FTA is signed with Sri Lanka, as a portion of its exports and imports of goods are done through the Colombo ports. Sri Lanka also would benefit from signing the trade agreement. 

Although there are some complexities in the case of signing the FTA deal, an effective diplomatic negotiation through dialogue can remove the obstacles. Thus, Sri Lanka and Bangladesh should sign PTA as soon as possible to tap the untapped potential to move forward the issue of FTA. Sri Lanka and Bangladesh could benefit from signing PTA.

(Source: https://www.eurasiareview.com/21112021-sri-lanka-and-bangladesh-should-sign-free-trade-agreement-oped/)