Bangladesh has expressed interest in signing a Free Trade Agreement (FTA) with the Eurasian Economic Union (EAEU), a Russian-led Eastern European economic union comprising Belarus, Kazakhstan, Armenia and Kyrgyzstan, to explore the export potential of various products, including knitwear.
The commerce ministry has requested the foreign ministry to make a formal proposal to the Eurasian Economic Commission (EEC) regarding the signing of the FTA.
The countries belonging to the European Union, one of the largest economic blocs in the world, had a foreign trade volume of $7,311 billion in 2020. The gross domestic product of the countries is $1,634 trillion.
Bangladesh does not get duty free facilities in Eurasian markets which have huge potential for Bangladesh's export products. Bangladesh's exports to these countries have increased significantly over the past decade and the amount stands around $500 million.
According to the Export Promotion Bureau, Bangladesh's exports to EAEU during July-December of the current financial year amounted to $382 million which was $677 in the previous fiscal year. And in 2019-20, Bangladesh exported goods worth $498 million to EAEU.
Commerce ministry officials said Bangladesh has huge potential for the export of frozen food including knitwear, jute goods and shrimp to countries in the region. Exports are not growing at the desired level due to the lack of duty-free facilities and the complexity of direct banking transactions with Russia due to US sanctions.
That is why the Bangladesh Bank has taken initiative to ensure a duty-free export facility by signing FTA and swapping currency with the Central Bank of Russia.
Following the signing of the Trade and Investment Framework Agreement or TIFA with the United States in 2014, Russia also proposed the formation of an intergovernmental commission with Bangladesh to enhance trade, investment, scientific and technical assistance, which the two countries signed in 2017.
The letter signed by Md Firoj Uddin Ahmed, Deputy Secretary (FTA) of Commerce Ministry said EAEU is a potential trade partner of Bangladesh. During the last decade, the trade volume has increased substantially. In this context, the commerce minister signed a Memorandum of Cooperation between Bangladesh and EEC in Moscow in May 2019.
A Working Group was formed under the memorandum to develop trade and economic cooperation in 19 sectors. The first meeting of the working group was held on 30 November-December 2021 at the EEC headquarters in Moscow. In the meeting, Bangladesh expressed its interest to conclude an FTA with the EAEU. In response, EEC asked to send a formal proposal so that it can seek the concurrence of its member states.
Commerce Ministry officials said Bangladesh is poised to graduate from the Least Developed Country in 2026. Although this will uphold the image of Bangladesh in the world Dhaka will lose preferential market access as LDC in many export destinations.
To face the challenge of graduation, the ministry of commerce has taken a strategic policy of signing FTA and Preferential Trade Agreement (PTA) with its important trading partners including EAEU for ensuring smooth and sustainable graduation.