November 8, 2021 (MLN): With changing world order, the countries are looking beyond the historic events, to reap maximum benefits by exploring the existing potential in terms of bilateral relations.
Despite having bitter-sweet relations owing to some dark historic spots which have encumbered both countries to attain maximum benefits from bilateral trade, Pakistan and Bangladesh are all set to avail the opportunities in hand.
In this connection, there has been renewed interest in Islamabad and Dhaka to revisit the possibility of signing an FTA between the two countries. With Bangladesh's LDC status expected to lapse in 2026, the government of Bangladesh is looking to maintain market access in key markets through trade agreements.
The idea of a Free Trade Agreement (FTA) between Pakistan and Bangladesh was first proposed in 2002, however, for various reasons this could not move forward at that time.
In a recent meeting with Pakistan’s High Commissioner to Bangladesh Imran Ahmed Siddiqui, Prime Minister of Bangladesh Sheikh Hasina showed her desire to improve the trade ties and enhance economic collaboration between two countries.
Bangladesh government is considering trade agreements with 44 countries to see if PTAs are possible. Dhaka has approached 11 countries to sign free trade agreements. These countries' responses have mostly been positive. Therefore, Pakistan can avail of this opportunity and negotiate with the Bangladesh government for a free or preferential trade agreement, Nida Gulzar, Senior Analyst at Pakistan Business Council (PBC) said.
Bilateral trade between Pakistan and Bangladesh has been in favor of Pakistan for at least the last 10 years. However, Pakistan's exports to Bangladesh reduced by 38.4% during the previous decade to stand at $583.44 million in 2020.
PBC in its report stated that there exists an export potential of at least $2.95 billion in Bangladesh for Pakistani exporters, mainly driven by sectors that include textile, agriculture, foodstuff, chemicals, base metals, plastics, and salt & cement products. The aggregate export potential for the top 25 commodities amounted to $1.24 billion.
On the other hand, the country has only exported goods worth $435.78 million for these top 25 commodities to Bangladesh during the year.
Ten of the top 25 products fall under the category of 'Denim and Woven Fabrics of Cotton' (HS 52-55). While Pakistan can potentially export $522.74 million worth of these commodities, it exported $341.25 million worth of woven fabrics to Bangladesh.
To make the most of the existing potential, the report underlined that there is room for tariff cuts for goods traded between the two countries.
In addition, regional syndication restriction claims by Bangladeshi potato exporters need to be investigated. While Pakistani food exporters should improve compliance with the standards set by Bangladesh Standard & Testing Institution (BSTI).
A mechanism between the two countries needs to be agreed upon to ensure Pakistani Consignments especially of fabrics are not inordinately delayed. Meanwhile, diversification of the export basket to Bangladesh can also be taken under the consideration.
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