Bangladesh Signs Preferential Trade Agreement with Bhutan

News Desk

Bangladesh signed its first-ever bilateral Preferential Trade Agreement(PTA) with Bhutan to enhance trade in goods, investment and economic cooperation between the two countries. On 06 December 2020, through signing the PTA with the Himalayan country, Bangladesh has also entered into the era of free trade agreement (FTA) and preferential trade agreement (PTA) as part of its preparations for the post-LDC period when the country will lose duty-free market access to developed countries.
Commerce minister Tipu Munishi signed the agreement at a ceremony, which also marked the celebration of 50 years of the diplomatic relationship between the two countries, held at Foreign Service Academy in Dhaka. Bangladesh prime minister Sheikh Hasina and Bhutan prime minister Lotay Tshering witnessed the signing by joining the event virtually respectively from Ganabhaban in Dhaka and Thimphu in Bhutan.

The volume of bilateral trade between the two countries was only $57.46 million in the fiscal year 2018-2019. Of which, Bangladesh exported goods worth $7.56 million and imported goods worth $49.90 million in the year. Under the PTA, 10 Bangladeshi products, including three types of readymade garment products such as men’s/boys jacket, blazers, trousers and shorts, babies garments and clothing accessories, three types of fruit juices, green tea, mineral water, particle board and plywood, will get duty-free access to Bhutanese market.
Bangladesh will provide duty-free market access to 16 Bhutanese products, including milk, natural honey, wheat or meslin flour, wheat bran, homogenized preparations of jams, fruit jellies, marmalades, food preparation of soya bean, mineral water, quartzite, cement clinkers, Portland cement, soap, particle board of wood, ferro-silicon, bars and rods of iron or non-alloy steel and wooden furniture used in office and bedroom.

Another 90 products of Bangladesh and 18 products of Bhutan that have been enjoying duty-free benefits in respective markets will also continue to get special exemption under the agreement. There is also provision in the agreement to include new products in the lists based on consultations.

Tipu Munshi at a press briefing after the signing ceremony said that the volume of bilateral trade would double within five to six years as they expected an increase in trade at the rate of 15 per cent a year following the agreement. He said that Bangladesh imported a huge quantity of boulder stones for its development projects from the country. He also said that the experiences of signing agreement with Bhutan would help Bangladesh in upcoming FTAs and PTAs with other countries.

The country is planning to sign a number of FTAs and PTAs with a number of countries to keep its export performance once it graduates from a least developed country to a developing one, he said.
Bhutan economic affairs minister Lyonpo Loknath Sharma said that Bangladesh was the second largest export destination for Bhutan and the agreement would boost its export to the country. Foreign minister AK Abdul Momen said that the signing of the PTA would take the bilateral relationship of the two countries to a new height. He said that the signing of the PTA not only emphasized the common priority of economic development but also symbolized mutual commitment to carry forward the relation to a new height. Business communities of both countries will take the advantages of this PTA, he hoped. Bhutanese foreign minister Tandi Dorji and Bangladesh commerce secretary Jafar Uddin also spoke at the programme.

PM’s private industry and investment adviser Salman F Rahman, foreign secretary Masud Bin Momen, FBCCI president Sheikh Fazle Fahim and ambassador of Bhutan to Bangladesh Kutshab Rinchen Kuentsyl were also present at the signing ceremony.
It is to be mentioned that PTA is a trading bloc that gives preferential access to certain products from the participating countries. This is done by reducing tariffs but not by abolishing them completely. It is the first stage of economic integration. These tariff preferences have created numerous departures from the normal trade relations principle, namely that World Trade Organization (WTO) members should apply the same tariff to imports from other WTO members.