The Federation of Bangladesh Chambers of Commerce & Industries (FBCCI) has recommended that the government scale up engagements with six major trade blocs to survive challenges stemming from Bangladesh's graduation to developing country status in 2026.
Bangladesh should approach the blocs for joining them, or sign trade agreements with members belonging to the coalitions, FBCCI President Jashim Uddin said at a programme in Dhaka on Wednesday.
Referring to the trading alliances – the Regional Comprehensive Economic Partnership (RCEP), European Economic Union, USA, EU, post-Brexit UK and African Continental Free Trade Area, Jashim Uddin noted that they control more than 90% of world trade.
He said Bangladesh will have to face a series of challenges both at home and abroad once it steps into the developing country club in 2026.
The FBCCI president said the country's export will experience severe competition in terms of both price and quality, while local industries will lose the shield of protective tariff and tax measures following the graduation.
"We need bilateral FTA [free trade agreement] and PTA [preferential trade agreement] to make our export sustainable and to survive the competition with the market peers," he added.
The UN in November last year approved Bangladesh's graduation to developing country status in 2026, with a potential five-year take off period from 2021. During the preparation stage, the country will get all market access facilities meant for a least developed nation. In addition, there will be another three-year quota-free facility from 2026 to the European market.
This means there will be no facilities left for Bangladesh in foreign markets after 2029. The country's export then will have to rely on bilateral treaties such as PTA and FTA to compete with its peers.
Bangladesh could sign a bilateral deal with Nepal only.
The FBCCI president said Bangladesh needs to highlight specific trade topics, such as tariff loss, environmental issues, labour issues, investment, rules of origin, e-commerce and movement of persons, while negotiating the deals.
He emphasised enhancing the negotiation capacity of both public and private bodies and called for public-private joint efforts.
Noting the remarkable progress made in the country's industrial sector, Jashim Uddin sought policy support so that a backward linkage industry can be set up. He said the existing policies and regulations should be reconfigured in line with the fourth industrial revolution.
Referring to the failure of the banking sector regarding facilities for small and medium enterprises (SMEs) yet, he said SMEs must be facilitated for the sake of the economy.
"Banks are more inclined towards the corporates since the approach can bring in more success in lending with a little effort. But they should discard such mentality."
He said SMEs are forced to borrow from non-governmental organisations at 20-25% interest, which impedes their recovery from the pandemic.
The FBCCI president also spoke on various issues, including the government's revenue policy, harassment of traders by customs officials, and stopping VAT collection from small ventures.
He also requested the government not to impose a lockdown in the future even if Covid infections soar.