FTA to expand export basket to GCC

AS the Gulf countries are the largest labour market for Bangladesh, so reaching a Free Trade Agreement (FTA) with Gulf Cooperation Council (GCC) is no doubt a much needed to boost trade with Arab countries. A Sunday report of an English daily said, Bangladesh Tariff Commission (BTC) suggested that the government should sign a FTA with GCC to raise export volumes to six Arab nations. The six nations are – Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Oman and Bahrain. We agree with the BTC’s recommendation considering the export potentials from which Bangladesh may benefit enormously with some new export targets.
Duty-and-quota-free market access to Saudi Arabia was an expectation of Bangladesh since 2008. Being a member of GCC customs union, the Kingdom is not capable of providing FTA benefits to a particular country unilaterally. Therefore, it was suggested that Bangladesh should approach GCC for trade benefits. In the process, Bangladesh has taken an initiative to sign FTA with GCC and BTC submitted a study report to the Commerce Ministry identifying some prospects and problems in signing the proposed FTA with GCC nations.
The predictable benefits of signing FTA with GCC countries depend on whether Bangladeshi exporters can make the best use of probable duty-free market access under the agreement. Primarily 190 products including apparel items were identified for seeking duty-and-quota-free (DQF) market access expecting great export potentials to the GCC countries. To avail market access or substantial tariff preference in most exportable products, the government should take adequate measures for FTA success. The move by the Commerce Ministry to seek opinions from stakeholders, particularly exporters to move forward with the issue, is indeed a positive step.
The proposed FTA might cover only three areas – trade in goods, trade in services and investment. The BTC findings suggest that the readymade garment export to the GCC countries might be increased significantly if DQF facility can be obtained. GCC is now facilitating a market of $11 billion for Bangladeshi RMG products. In FY 2012-2013, Bangladesh exported worth around $200 million RMG products to GCC. On the other hand, it imported around $3 billion products – mainly fuel from the six GCC countries in the same fiscal.
However, the GCC nations have some other demands including pharmaceuticals, footwear, ceramics and spices. Bangladesh can grab the opportunities. We suggest that Bangladesh should not confine its concentration only to RMG products. Rather, it can generalize its export items for the GCC hub from kitchen market items to jute, carpets, and even luxury stuffs. Bangladesh missions in GCC countries must be more vigilant to explore the other demands, which Bangladesh can give more attention to. Bangladesh should consider the demands of the large number of expatriate Bangladeshis living in the GCC countries while mapping out the GCC market. They should make good use of aggressive economic diplomacy. We believe that FTA with GCC will enhance possibility of human resources export to those countries and it will ensure a minimum working standard and proper wages for Bangladeshi expatriates. The government should take it seriously and act accordingly.