Officials of Bangladesh and Australia will meet in Dhaka in March to finalise the draft of a Trade and Investment Framework Agreement (Tifa) – a deal establishing a framework for the expansion of trade and removal of investment barriers between the two countries.
According to Commerce Secretary Md Jafar Uddin, Bangladesh has proposed some changes to the initial draft prepared by Australia – the 14th largest economy in the world.
"On the amendments, the Australian Department of Foreign Affairs and Trade wrote to us last week requesting a meeting with the Australian High Commissioner in Dhaka," the commerce secretary told The Business Standard.
Under the terms of the draft, the two countries will seek strengthened trade and investment through bilateral cooperation in mutually arranged sectors, such as textiles and apparels, manufacturing, information and communication technology, skills development and education services.
It notes that the participants will endeavour to take appropriate measures to encourage and facilitate trade and investment between Dhaka and Canberra.
Meanwhile, Bangladesh High Commissioner to Australia Mohammad Sufiur Rahman, in a report to the commerce ministry in December 2020 said if the deal was signed, the volume of bilateral trade between the two countries would reach $5 billion soon.
The Bangladesh High Commission in Canberra also noted that Tifa would help raise Australian investment in Bangladesh.
In 2017, Australia signed Tifa with Sri Lanka while Bangladesh went for a similar trade agreement with Russia.
According to commerce ministry officials, Bangladesh currently enjoys duty-free exports to Australia. Despite the market facility being in place, Bangladesh's exports to the country have not reached the desired level.
In the last fiscal year, Bangladesh's exports to Australia amounted to $678 million, which is more than 2% of Bangladesh's total export earnings. In the previous fiscal year, the export volume was more than $800 million. Bangladesh mainly exports woven garments, knitwear and home textiles to Australia.
Commerce ministry officials are of the opinion that Tifa will remove trade barriers, attract more Australian investments and help increase Bangladesh's exports to Australia. Moreover, the deal will help Bangladesh retain trade facilities even after it graduates to the status of a developing country in 2024.
Under the proposed agreement, the two countries will form separate trade and investment committees comprising officials from their foreign ministries and commerce ministries and the high commissioners based in Canberra and Dhaka.
The committee meetings will identify issues in bilateral trade and investment, and will work to address them.
Though the draft prepared by Australia mentions a five-year deal, the Bangladesh High Commission in Canberra has suggested a longer-term agreement.
According to the Bangladesh Bank, Australian foreign direct investment inflows to Bangladesh stood at $845 million at the end of June last year – the seventh largest single country investor for Bangladesh.
Australia has mainly invested in Bangladesh's gas and petroleum sector.
'A delay will make things difficult'
The Bangladesh High Commission in Australia, in the report to the commerce ministry, said Australia was shifting its current focus to business expansion beyond traditional markets in China, Japan, South Korea and ASEAN (Association of Southeast Asian Nations) due to the strategic tensions with China and plateauing of demands elsewhere.
"South Asia in general is getting greater focus, though there is a risk of India being considered synonymous with South Asia in Australian thinking and Bangladesh may thus get bypassed," said the report.
In the report, Bangladesh High Commissioner to Australia Mohammad Sufiur Rahman said, "Australia is interested in Bangladesh and we will have to prepare well to face the challenges of the post-Least Developed Country (LDC) era, when we may lose preferential market access and hence we ought to engage Australia well in advance to ensure that such favourable treatment continues under a bilateral arrangement."
He referred to some recent developments, such as the Australian Foreign Minister's Dhaka visit in 2019 after a gap of over 20 years, Australia's support for Bangladesh on the Rohingya issue and the country's revision of its travel advisory for Bangladesh.
"These are indications of keenness on the part of Australia to engage Bangladesh more as a partner in the Indian Ocean region, which is becoming important from both economic and strategic considerations," said the High Commissioner.
Urging the commerce ministry to decide on the agreement with Australia similar to the Bangladesh-USA Trade and Investment Cooperation Forum Agreement (Ticfa), the Bangladesh envoy said, "A delay will certainly make things difficult."