By Nasriya Naffin (TON Sri Lanka)

Bangladesh has shown remarkable progress in global trade as a leading supplier in the recent past with a rapidly growing economy. Bangladesh has shown an average economic growth rate of about 6.5 per cent over the last decade and has managed to maintain a growth rate of five per cent even during the COVID 19 pandemic. The country is expecting to cancel its name from the United Nations as least‑developed country (LDC) list in 2024.

However, if Bangladesh comes out of the LDC category the country will also lose many of its current duty‑free export privileges. To overcome these losses Bangladesh has started working hard to sign a free trade agreement (FTA) with ASEAN (Association of Southeast Asian Nations). ASEAN is an organization of 11 South East Asian countries. Bangladesh has been a member of the ASEAN Regional Forum since 2006. The country has formally initiated negotiations with ASEAN to sign a free trade agreement (FTA) hoping for greater market access.

Due to its large market volume and most of the raw materials for Bangladesh's garment and other industries has been imported from these South East Asian countries, FTA with ASEAN going to be a plus for the country's economy.  

The ministry of commerce, Bangladesh is planning to send a special representative to the ASEAN headquarters in Jakarta, Indonesia to have a discussion in this regard. The Bangladesh ambassador to Indonesia will also join the meeting. The Bangladesh officials will highlight the prospects of having free trade agreements with them and the advantages of investing in their country.  

Bangladesh is hoping that its exports will enjoy the duty-free quota-free (DFQF) market access in some developed nations till 2029 even if they come out of the LDC category.

As of now, Bangladesh is enjoying zero-duty benefits, preferential trade benefits and regional trade benefits on exports to 38 countries, including 28 in the EU. This is going to be a good opportunity for the ASEAN nations to work hand in hand with Bangladesh so that they too can enjoy the benefits from DFQF market access. The country is also benefiting from duty-free access to the US for 97 per cent of its products excluding garments. 

Bangladesh also believes that the trade volume between them and ASEAN may multiply if a joint feasibility study is conducted to evaluate the static and dynamic effects of FTA. Data collected in 2020 reveals that Bangladesh has imported goods from 10 ASEAN countries namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam for nearly 7 billion USD.

However, the exports from Bangladesh to the Association of South East Asian Nations remains still less than USD 1 billion per annum. The country can gain many advantages from signing an FTA with ASEAN rather than signing individual bilateral agreements with each ASEAN member. Moreover, Bangladesh has also focused on the newly industrialized south East Asian countries with a vast trade potential that are close to them and are also members of ASEAN. 

According to a study titled Bangladesh: A story of a Phoenix, in 2030, the ASEAN region is going to be the fourth-largest economy in the world.   The region’s total expenditure on clothing and footwear totaled USD 51.2 billion in 2017. Its digital economy generates USD 150 billion in revenue every year and will add an estimated USD 1 trillion to the regional GDP in the next 10 years. 

ASEAN countries hold 200 million digital consumers and 230 million online customers at present and these numbers are expected to expand by 7.3 percent annually on an average.  

At present Bangladesh has truly little foreign direct investments (FDI) compared to some of its rivals like Vietnam. FDI’s are a vital source of investment for developing countries. Therefore, it is essential for the country to sign an FTA with ASEAN. By signing an FTA with ASEAN, not only the trade and export of the country will get a boom but it will help to brand Bangladesh.

Bangladesh needs several investments as infrastructure development and if this investment can come through ASEAN the country can develop it ports, roads, and airports. 

Owing to the fact that Bangladesh has a rapidly growing massive population who belong to the middle-class makes it a great market place to ASEAN countries which presents promising benefits to ASEAN countries. However, the trade officials think all may not go smoothly for Bangladesh by getting into an FTA. According to them, the huge tariff gap between ASEAN member countries and Bangladesh can become a big loophole. The economists believe the country should also widen the range of exports apart from garments after exiting from the poor-country club to enjoy the benefits from free trade pacts. At present, Bangladesh does not have any FTAs even with all the efforts the government has taken to sign such a deal.