Tarun Kanti Das
Since July 1, the Chinese government has provided duty-free access to 97 percent of Bangladesh's customs duties. The Customs Tariff Commission of the State Council of China has recently issued a notice granting this benefit.
Although Bangladesh has already been enjoying duty-free access to 3,095 products under the Asia-Pacific Trade Agreement (APTA), the Chinese government has granted duty-free access to a total of 8,256 Bangladeshi products under the agreement.
It is to be noted that Bangladesh, as a least developed country, as a long-tested friendly country, is being given this new facility. Bangladesh's economic and infrastructural development dependence on China is remarkable.
China is Bangladesh's largest trading partner. According to experts from the Friends of the Silk Road Bangladesh (FOSR) and the Bangladesh-China Business Association (BCBA), the implementation of the FTA agreement and the proposed 'One Belt One Road' will strengthen unity between Europe and Asia.
"We consider the implementation of the Belt and Road Project as a symbol of peace in the region," said President H. E. Xi Jinping, People's Republic of China.
Now is the time to encourage open development and build a fair, logical and transparent world trade and investment system. Whether in Asia, Europe, Africa or the Americas, they will all have the cooperation and participation in the Belt and Road Plan. ”
China is creating two 'economic corridors'. Roads and railways from Khunming to Cox's Bazar. The second is by rail and road from Xinjiang in China to Gwadar seaport in Balochistan, Pakistan.
‘One Belt One Road’ — that is, OBOR China’s dream of establishing one region one way. At least 70 countries in Asia, Africa and Europe are planning to build water and land connectivity with China, build infrastructure, develop language and cultural relations, exchange education and medicine, establish sister cities between major cities and there are also various plans to increase trade. These initiatives include the land-based Silk Road Economic Belt and the ocean-going Maritime Silk Road.
One Belt One Road is also abbreviated as 'Ober' or 'Belt and Road' Initiative. To finance the project, a Chinese-led bank named Asian Infrastructure Investment Bank (AIIB) has been set up with a capital of 10 thousand crore dollar. In addition, China has set up a 4.5 thousand crore dollar Silk Road fund. AIIB (Bank of China) will lend Rs 5,700 crore to India amid recent border tensions.
The country is using state and non-government organisations to implement this plan. A memorandum of understanding has been signed with China on the project by 44 countries. Chinese President Xi Jinping has visited more than 20 of the countries involved in the project.
He is the Chinese dreamer of this new route. He presented this plan to the world in October 2013. One Belt One Road or ‘OBOR’ is currently a hot topic in the world.
UN Secretary General Antonio Guterres praised China for creating new areas of international cooperation and contributing to globalization.
In 2018, 18.94 percent of Bangladesh's total trade was with China. China is the largest source of imports for Bangladesh. Bangladesh's main export is the garment sector, which relies heavily on China for its raw materials. Bangladesh also imports raw materials from China for the production of leather goods and medicines.
Bangladesh's recent growth in foreign investment has largely been driven by Chinese investment. China is currently investing in a number of projects in Bangladesh, including in the transport and energy sectors. Chinese infrastructure companies have been implementing several projects in Bangladesh.
Although their activities are slowing down due to the global epidemic Covid-19, Prime Minister Sheikh Hasina has said that China and Bangladesh complement each other's humanitarian cooperation in the global epidemic in line with the foreign policy of Bangabandhu.
The Chinese government has stood by us in these difficult times by sending the highest quality medical supplies, specialists and a team of doctors and specialists on special chartered aircraft.
Meanwhile, Deputy Chief of Mission of the Chinese Embassy Hua Yenlong told the media, "China will give priority to all possible cooperation and assistance to Bangladesh if it can successfully develop a vaccine to prevent the corona virus."
However, the supply of construction materials for ongoing projects has been disrupted during the Covid-19. Moreover, many Chinese workers engaged in infrastructure construction projects in Bangladesh are also stranded in their country.
As a result, the time allotted for the completion of the projects may increase and some expenses may also increase. Therefore, the Bangladesh government may need to take more money, which means that the debt burden has increased at least a little.
Bangladesh is still lagging behind in bilateral trade with China, one of the world's largest economic powers, and the trade deficit is huge.
Bangladeshi products currently exported to China include readymade garments, jute and jute products, leather, fish and crabs, plastic waste, flowers, vegetables and fruits, spices and tobacco. Of this, more than 60% of the processed leather produced in Bangladesh is exported to China. In addition, a large portion of unprocessed leather is exported to China.
In that case, the duty-free facility will increase the export of other leather goods such as shoes, bags and accessories to local traders.
On the other hand, Bangladeshi-made garment manufacturers currently export about 21.5 billion dollar worth of goods worldwide. Of this, only 500 million dollar worth of clothing is exported to China. China is the world's largest exporter of ready-made garments, importing 338 billion dollar a year. If Bangladesh can meet a portion of China's total demand, it will multiply Bangladesh's export earnings.
The government should take immediate action to implement the declaration of duty-free access to 97% Bangladeshi products in the Chinese market. And if we could take advantage of that opportunity, the trade deficit between the two countries would be greatly reduced.
As a least developed country in the Chinese market, Bangladesh will now get about 8256 products duty free. At the same time, the export volume of Bangladeshi products to the country will undoubtedly increase a lot every year.
Bangladesh is already enjoying preferential treatment from China under the APTA (Asia-Pacific Trade Agreement) and China unilateral tariff liberalisation for the least developed countries.
Bangladesh mainly imports machinery, cotton, consumer goods and chemical products from China and exports jute, jute products, readymade garments, processed leather etc.
China formally proposed an FTA with Bangladesh in 2014. However, Bangladesh has followed China in exporting more trade facilities and clothing items to enter China's duty-free market.
Importing low-cost products from China will also benefit consumers as well as manufacturers. It can help Bangladesh earn more foreign exchange. The biggest beneficiaries of an FTA with China will be the country's food, leather and textile, manpower and natural resource-linked Bangladeshi industries and services sectors.
The existing cooperation between the two countries is aimed at enhancing economic exchanges and trade, building important projects in the areas of infrastructure, energy, power, transport, information, telecommunications and agriculture, and strengthening practical cooperation between Bangladesh and China under the BCIM Economic Corridor. India, Myanmar and China are now Bangladesh's largest trading partners.
But China does not want a trade surplus as its trade goal. China's main goal in the future is to import more competitive products from Bangladesh. The signing of this free trade agreement between China and Bangladesh will enable Bangladesh to provide China with more desirable products, services and investment opportunities. ( To be continued)
Tarun Kanti Das is Senior Vice President, Bangladesh-China Business Association (BCBA), Bangladesh and a member of International Affairs Sub-Committee, Bangladesh Awami League.
