The bilateral free trade agreement (FTA) between India and European Union (EU) is likely to have a negative impact on Bangladesh’s exports, trade analysts said yesterday.
The remark came out at a meeting on the issue organized by Metropolitan Chamber of Commerce and Industry (MCCI) and Bangladesh Foreign Trade Institute (BFTI) at the MCCI office.
A free trade agreement, essentially, eliminates tariffs, import quotas and preference on most (if not all) goods and services traded between the two parties.
The FTA will aid Indian companies to widen their market into EU, while allowing EU access to India’s 1.2 billion customers. The chief negotiators of India and EU is to meet next week in Brussels ahead of the ministerial level.
This move will indeed hit Bangladesh’s export badly. The EU is the single largest market for Bangladesh’s exports, accounting for 57 percent, or $13.7 billion, of 2011′s export earnings. Through the deal, India will grab the existing market shares of Bangladesh in the EU.
“Bangladesh’s exports to the EU are likely to be affected if the proposed India-EU free trade agreement is signed and apparel items are included in the deal,” said Rokia Afzal Rahman, president of MCCI.
Bangladesh may lose as much as 15 percent or $1.3-1.5 billion in value of the EU market following the deal, according to a study by BFTI.
“There will be erosion of profitability due to loss of a portion of the EU market,” said Md Mozibur Rahman, chief executive officer of BFTI.
However, Commerce Minister GM Quader pointed it is too early to be concerned, “We must be able to compete — we will not remain a LDC forever and enjoy the benefits of cheap labour. We aim to march forward to the mid-income status.”
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) former president Fazlul Hoque and Centre for Policy Dialogue (CPD), Bangladesh Additional Research Director Khandaker Golam Moazzam also spoke on the occasion.
Source: Priyo