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Exporters brace for tough time

Jitters set in as India moves to sign free trade agreement with EU

Refayet Ullah Mirdha
Bangladesh exporters fear tougher days ahead as India has signed free trade agreements (FTAs) with Southeast Asian nations and is expected to strike similar deals with European countries.
Duty benefits from Asean (Association of Southeast Asian Nations) and the European Union enabled Bangladesh to fetch more than $12 billion from RMG exports last fiscal year, despite global recession.
Export Promotion Bureau data shows over half of last fiscal year’s total $15 billion exports had been destined to the EU, Bangladesh's largest trade partner.
In its latest move, India signed a free trade deal with Asean on August 13 in Bangkok, aftersix years of negotiations.
This pact for the regional free trade will come into effect from January. Under India's FTA with Asean, tariffs will be eliminated for about 4,000 products (which include electronics, chemicals, machinery and textiles) out of which,
duties for 3,200 products will be reduced by December 2013. Duties on the remaining 800 products will be brought down to zero or near zero levels by December 2016, say media reports.
Asean is India's fourth-largest trading partner after the EU, United States and China. T\vo-way trade between India and Asean stood at $47 billion in 2008. Both parties to the FTA are expecting a $10 billion increase in trade in the first year alone.
The EU has expressed interest in concluding the process of negotiations with India by 2010.
India is also expected to begin a new round of FTA talks with Japan, South American trade bloc Mercosur, Southern Africa Customs Union and Australia.
Annisul Huq, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said: "If the FTA between India and the EU finally gets through, Bangladesh wall face stiff competition in exports to Europe."
The generalised system of preferences
offered to Bangladesh in exports to the EU has been eroding fast, Huq added.
"Signing an FfA with economically powerful countries and groupings by India is a matter of that country and we cannot stop them. But we should not sit idle."
"We must negotiate with the potential countries to protect our share of overseas trade. We must be competitive as there is no second option in this case," said Huq, also tiie president-elect of Saarc Chamber of Commerce and Industry.
"To stay in business, Bangladesh must conduct a thorough research on the RMG sector with participation of all stakeholders,” said Fazlul Hoque, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). He also suggested that Bangladesh continue talks with other countries to remain in the race.
The problem is, Bangladesh lacks adequate preparation in international trade negotiations, he said.
He suggested Bangladesh Foreign Trade Institution (BFTI) should come up
with research findings to help negotiate in realising a share of international trade.
“The EU's FTAs with India, Asean and South Korea are definitely a concern for Bangladesh,” said ZiUul Hye Razi, trade adviser to the EC Delegation in Dhaka.
He said Bangladesh should be more competitive to retain business with the EU. Bangladesh may get a preference in the EU if the Rules of Origin are relaxed next year under the Lisbon Treaty.
MA Taslim, chief executive officer of BFTI, said Bangladesh exports to the EU may be affected slightly if the FTA is finalised, but it is not a matter of alarm, as other competitors to India may also demand FTAs with theEU.
He said BFTI plans to conduct research in this connection, but it requires funds and human resources. "Now, we are emphasising a strong BFTI by recruiting adequate skilled human resources." reefat@thedailystar.net