Bangladesh has again proposed that the Indian government refrain from retaining an anti-dumping duty imposed on the country’s jute and jute goods once it ceases to have effect on December 31.
“We proposed to the Indian commerce and finance ministries for the removal of the anti-dumping duty on Bangladeshi jute and jute goods,” said Md Hafizur Rahman, additional secretary to the commerce minister.
Rahman was a member of an entourage of Commerce Minister Tipu Munshi of Bangladesh who visited the Indian commerce and finance ministries on December 22 and December 23.
The visit aimed to negotiate withdrawal of the duty, a formal start to talks for signing a comprehensive economic partnership agreement (Cepa) and a guarantee of the supply of seven basic commodities including rice, wheat and lentil.
In response, the Indian side said the first 200,000 tonnes of Bangladeshi jute and jute goods would be allowed to enter duty free annually and any further amount would be subject to the duty.
They reasoned that the amount being offered the duty-free facility was what Bangladesh was exporting to India before the duty came into effect on January 5 of 2017.
“However, we want full removal of the anti-dumping duty…as Indian is one of the biggest markets for the local jute and jute goods,” Rahman told The Daily Star over the phone.
Regarding the Cepa, Rahman said the Indian side demanded more than one month for conducting studies before formally starting negotiations.
They reasoned that signing of a Cepa between Bangladesh and India was a big deal as it includes not only tariff issues but also matters pertaining to investment and services.
On the seven commodities, India deemed that more time would be required to conduct further studies, said Rahman.
Bangladesh has been looking for alternative sources of the seven commodities because of volatility in the global food supply chain stemming from the severe fallouts of the Russia-Ukraine war.
Jute and jute goods shipment to India stumbled for the anti-dumping duty, which varies based on the item from 5 per cent to 30 per cent, by New Delhi.
During an earlier visit of Prime Minister Sheikh Hasina to India in September, she and Prime Minister Narendra Modi announced in a joint statement that the Cepa negotiations would start from December this year.
Last fiscal year, Bangladesh imported goods worth $16.19 billion from India, the second biggest source of imports after China.
In August this year, a joint study said Bangladesh might not make a large gain from a Cepa. This was due to the fact that Bangladesh would lose duty-free market access provided for it being a least developed country (LDC).
Comparatively, India will make a larger gain from the trade deal primarily through the removal of high tariff rates it currently faces in Bangladesh, said the study.
The Cepa is part of Bangladesh’s preparations for retaining duty benefits once it makes the United Nations status graduation from an LDC to a developing nation in 2026.
However, Bangladesh should slowly liberalise or maintain a list of sensitive products which is widely practised in the signing of such deals worldwide, said experts.
The trade relationship with India is dominated by imports, said the study. If goods and services through informal channels are considered, imports from India will increase substantially.
If Bangladesh signs a free trade agreement (FTA) with India leaving the current high tariff rates unchanged, trade diversion effects will be substantial, experts said earlier.
The proposed deal, which calls for a withdrawal of duties, is expected to boost Bangladesh’s exports by 190.15 per cent and more if transaction costs are also reduced through improved connectivity, according to the study.
India’s exports to Bangladesh are expected to increase by 188 per cent. The Cepa will increase Bangladesh’s GDP by 1.72 per cent and India’s by 0.03 per cent, the study found.
Currently, India is Bangladesh’s second biggest trading partner after China. In fiscal 2021-22, Bangladesh’s exports to India hit $2 billion for the first time, while imports through the official channel stood at about $10 billion.
However, if imports through unofficial channels is factored in, the figure would stand at about $14 billion.
On average, imports from India are subjected to tariffs of about 20 per cent, fetching the state coffer about $2 billion.
It has been estimated that an FTA or agreements like the Cepa with India alone could result in trade diversion worth $700 million.
পররাষ্ট্রমন্ত্রী ড. এ কে আব্দুল মোমেন বলেছেন, আমাদের অভ্যন্তরীণ বিষয়ে কোনো দেশের মাথা ঘামানোর দরকার নেই।
