Bangladesh’s exports, particularly export of readymade garment, to European Union are likely to be affected in long term if India and EU sign a proposed free trade agreement, said officials of the Bangladesh Tariff Commission.
In short term, Bangladesh’s exports may not be affected as most of its products enjoy duty-free facility to EU market under its Everything But Arms scheme but in long term, exports to the region may be suffered if Bangladesh fails to diversify its export basket, they said.
The ultimate impact will depend on how much India gets preferential treatment in the FTA in export of apparel items to the EU.
So it is very much difficult right now to determine exact limit of shock on Bangladesh’s export to the region due to the agreement, they said.
According to media reports, both India and the EU are hopeful of signing the deal very soon as they have already reached the final stage of negotiation.
The BTC is now conducting a study on the possible impact on Bangladesh due to the FTA signing between India and 27-nation bloc EU.
According to the preliminary findings of the BTC, 16.92 per cent products which account for 2.17 per cent of total export earning of Bangladesh to EU are likely to be affected if India is provided with duty-free facility for these products under the deal.
Currently India pays 5 per cent duty on export of these products to EU while Bangladesh gets duty-free facility.
‘But 95 per cent of our export earnings come from EU by exporting only 15 per cent of products including RMG for which currently India pays 5 to 10 per cent duty,’ a BTC official told New Age on Sunday.
Bangladesh’s export will be affected if India is provided with duty concession for those products, BTC findings said.
The officials, however, said everything would depend on how much India got duty concession for the products.
They said Bangladesh should negotiate with EU so that the bloc did not include RMG in the deal as it was the Bangladesh’s main export items and EU was its largest destination.
India exports to EU mainly mineral fuels, mineral oils, natural pearls, precious stones, metals, imitation jewellery, woven and knit products, organic chemicals, electrical machinery and equipment, mechanical appliances, vehicles and accessories, iron and steel, footwear items.
On the other hand, the main items Bangladesh exports to EU are readymade garments, frozen food, leather, jute and tea. In 2010-11 fiscal year, Bangladesh’s total exports to the EU were more than $10.51 billion of which 90 per cent came from garments.
The BTC found less similarity between products exported by Bangladesh and India.
But India will certainly try to increase the volume of exports of those products including RMG if the country is provided with more flexible duty structure for those products, the officials said expressing concern.
India may create a huge challenge for Bangladesh, as India is also strong in apparel items, they said.
The government and exporters should also take preparation to tackle any negative impact of the deal and to keep Bangladesh export unhurt in future by expanding the list of exportable products to EU and find out new markets, they said.