Sri Lanka and Bangladesh set to sign free trade agreement – OpEd – Eurasia Review
Sri Lanka and Bangladesh should put in place a free trade agreement as soon as possible to secure their own trade interests. Sri Lanka and Bangladesh, as countries in South Asia, share common economic platforms. Sri Lanka and Bangladesh were parties to the SAARC Preferential Trade Agreement (SAPTA) and the South Asian Free Trade Area (SAFTA). The two countries were also parties to the Global System of Trade Preferences (GSTP), the Asia-Pacific Trade Agreement (APTA) and the Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation (BIMSTEC).
But Sri Lanka and Bangladesh both need a bilateral Preferential Trade Agreement (ACP) to boost trade and connectivity to ensure greater mutual benefit. It will be a great bilateral progress towards trade and investment between countries
Bangladesh has always expressed keen interest in signing a Free Trade Agreement (FTA) with Colombo in order to harness the enormous potential of bilateral trade between Bangladesh and Sri Lanka. If the signing of the FTA takes time, the two countries will sign a preferential trade agreement (PTA). The PTA will start with a short list of products that could open up opportunities for expanding trade, investment and tourism in the future. But first, Bangladesh and Sri Lanka can sign a preferential trade deal as a first step to tap untapped potential. Bangladesh and Bhutan signed a PTA on December 6, 2020. Now Bhutan and Bangladesh both benefit from ATP.
The two countries are expected to focus on utilizing the enormous trade potential between the two countries by signing a bilateral trade agreement. The two sides can increase their cooperation in various fields, including pharmaceuticals, information technology, agriculture, maritime safety and disaster management. Bangladesh has already expressed keen interest in training Sri Lankan nationals in paddy production, climate adaptation, disaster management and information technology and urged Colombo to expand training programs for Bangladeshis in marine fishing and nursing.
According to 2019 data from the Export Promotion Bureau, the annual trade volume between Bangladesh and Sri Lanka is around $ 13 million. Of this total, Sri Lanka exports goods valued at $ 9.86 crore, while Bangladesh’s exports amount to around $ 3.7 crore. This trade volume could be increased easily if Sri Lanka and Bangladesh signed 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, especially in rice growing and freshwater fishing, its experiences in emergency response, disaster management, climate change adaptation and mitigation. Bangladesh can obtain technical know-how from Sri Lanka in coastal fishing, aquaculture, marine culture and deep sea fishing. In the education sector, the two countries should have more institutionalized cooperation in capacity building, vocational training and skills development.
In the case of the health sector, Bangladesh may focus on the basic training of Bangladeshi nurses and other health professionals in Sri Lanka. Sri Lanka could greatly benefit from importing our world-class pharmaceuticals and medical devices in larger quantities. Basically, Bangladesh and Sri Lanka would both benefit from sharing experiences in agriculture, health and education for mutual benefit.
Bangladesh is advancing on the path of rapid development. Sri Lanka should sign a trade deal to guarantee the maximum of its trade interests. Bangladesh produces clothing, pharmaceuticals, cement, paper, electrical items and jute items, which are in great 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, in order to exploit untapped potential. Investors from the two countries are expected to come forward to exchange experiences on the development trend in the respective countries in the coming days.
Negotiations of an FTA with Bangladesh have been underway since 2013 and the signing of an FTA would signify the culmination of this discussion. The FTA is expected to enable the two countries to overcome existing tariff and non-tariff barriers and thus hamper trade between the two countries.
The signing of PCAs and FTAs (free trade agreements) would help both Bangladesh and Sri Lanka meet the challenges of the trade sectors. Preferential trade agreements will help boost exports considerably. Bangladesh must also sign several PTAs and FTAs prior to graduation (from Bangladesh), to enjoy the benefits of the least developed country category. Previously, Bangladesh and Sri Lanka had already agreed to sign the agreement.
By 2017, the two countries had completed the preparations required to sign a free trade agreement (FTA) – but the initiatives did not materialize due to internal issues. Currently, both should give priority to preferential trade agreements. To a certain extent, the free trade agreement is very difficult. Some problems, including revenue losses, have been linked to FTAs, as all products of the two FTA countries benefit from duty-free facilities. Bangladesh and Sri Lanka signed the 06 Memorandum of Understanding (MoU) 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 forward on the FTA path.
Sri Lanka occupies an advantageous position in the value-added garment industry, shipping lines and deep-water ports, financial services, ICT and skilled technicians in different sectors. On the other hand, Bangladesh enjoys advantages in the garment sector, a skilled workforce in the garment sector, agricultural products, processed foods and migrant workers. Bangladesh would benefit immensely from signing the FTA with Sri Lanka, as part of its merchandise exports and imports pass through Colombo ports. Sri Lanka would also benefit from signing the trade agreement. Although there are certain complexities in the case of signing the “FTA” agreement, effective diplomatic negotiation through dialogue can remove obstacles. Thus, Sri Lanka and Bangladesh should sign the PTA as soon as possible in order to harness the untapped potential to advance the “FTA” issue. Sri Lanka and Bangladesh could benefit from signing a trade partnership agreement.