World Bank sees no surge in Dhaka’s exports to India under FTA

DHAKA — The World Bank has dismissed the possibility of more exports from Bangladesh to India under either a bilateral free trade agreement or in a South Asia Free Trade Area, saying India’s import regime is retarding Bangladesh’s exports at present.

By From A Correspondent

Published: Mon 15 Aug 2005, 10:29 AM

Last updated: Thu 2 Apr 2015, 4:15 PM

Simultaneously, the bank, in a study report, released in Dhaka yesterday, has nullified claims that non-tariff and bureaucratic barriers have been constraining Bangladeshi exports; instead, it blames lack of fundamental comparative advantage of Bangladeshi items for the low level and slow growth of exports.

The findings of the study on ‘India-Bangladesh Trade, Trade Policies and Potentials of FTA’ were presented at a workshop on ‘Bangladesh- India Trade and FTA’, jointly organised by the World Bank, Bangladesh Enterprise Institute and South Asia Enterprise Development Facility in Dhaka.

The bank’s study has predicted huge welfare gains for Bangladeshi consumers in case of a bilateral free trade agreement that may ‘outweigh the total of government revenue losses, producer surplus losses resulting from the contraction of Bangladeshi production’.

Envisaging some gains for Bangladeshi producers from the agreement, the study stressed the need for improvement of infrastructure and administrative capacity on both sides of the land border crossings to reduce bottlenecks and to stay ahead of the expanded bilateral trade.

‘Otherwise, the economic welfare gains from the FTA would be severely compromised by increasing congestion, delays and informal payments,’ the report cautioned.

However, Bangladeshi leaders, including the finance minister and the foreign minister, have by this time ruled out the possibility of signing a bilateral free trade agreement with India, and economists and

trade specialists here expressed apprehension about Bangladesh suffering further trade deficit.

‘The trade relationship between Bangladesh and India is currently of special interest to both countries, particularly in the context of discussion between the two governments on the possibility of a bilateral free trade agreement,’ said the study.

Asked about the bank’s position on a bilateral free trade agreement, World Bank’s economist Zaidi Sattar said they support multilateralism with an overall import liberalisation that could result in consumer surplus benefits.

Ismail Hossain, a senior economist, discussing the report, pointed out that non-tariff barriers in the form of anti-dumping might have ‘intimidation effect’ on Bangladeshi exporters.

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