Bangladesh Needs To Plan Long Term For Obtaining Favorable Duty Tariffs In Chinese Markets

Economy

Bangladesh Needs To Plan Long Term For Obtaining Favorable Duty Tariffs In Chinese Markets

The Bangladesh Textile industry which exports a major chunk to China is faced with a Hobson’s choice of either dumping the Asia-Pacific Trade agreement (APTA) or forgoing zero tariff treatment from China for its exports. At present the Bangladesh government is conducting a thorough analytical study of the situation to work out the most feasible solution that would work out in favor of boosting their global export trade in the long run.

According to official sources from China, the Bangladesh Tariff Commission and Bangladesh Foreign Trade Institute (BFTI) have been set a one month deadline by which to decide on the option Bangladesh government would prefer.

The twist is that Bangladesh will be able to enjoy duty-free and quota free (DFQF) access to the Chinese market. However, for this, they are being asked to give up on the benefits they are currently reaping from APTA.

In a detailed communication, the Chinese embassy at Dhaka said “If Bangladesh opts to avail of DFQF, they will cease to receive preferential treatment of tariffs under APTA from the Chinese government.”

The facts laid bare state that Bangladesh being a member of the least developed countries (LDC) group, it will receive duty-free market access in 97 per cent tariff lines in Chinese markets if and when the Bangladesh government signs a letter of exchange with the Chinese government. Otherwise, if the Bangladesh government prefers to retain the ATPA benefits, there will be a total of 2,372 tariff lines from Bangladesh that will be able to avail 5 per cent to 100 per cent tariff preferences in China.

Interestingly, Bangladesh is a founder member of APTA. Under APTA norms it’s mandated that Bangladesh effectuates 35 percent value addition to avail tariff preferences in the Chinese markets. For DFQF, the corresponding figure for value addition stands at 40 percent. The rules are as per WTO arrangements.

From a futuristic perspective, Bangladesh will not continue to stay in the LDC group for long and is expected to transit from the group by 2022. In the event Bangladesh opts to avail DFQF in the Chinese markets, it will lose out on APTA in the short run. However, in the long run, once it loses its LDC status, it will be forced to surrender its DFQF facility too.

At present the Ministry of Commercef (MoC) Bangladesh is working out the modalities and trying to bargain for a facility whereby it can hold on to APTA benefits and at the same time obtain access to DFQF.