Sri Lanka and Bangladesh should set up a Free Trade Agreement (FTA) as soon as possible for ensuring their own business interests. Sri Lanka and Bangladesh as South Asian countries share some common economic platforms. Sri Lanka and Bangladesh were parties to the SAARC Preferential Trading Arrangement (SAPTA) and the South Asian Free Trade Area (SAFTA). The two countries were also parties of the Global System of Trade Preference (GSTP), Asia – Pacific Trade Agreement (APTA), and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). Sri Lanka’s Foreign Minister Prof. G. L. Peiris was in Dhaka recently for Indian Ocean Rim Association (IORA) and BIMSTEC meetings. Earlier in the year, Sri Lankan Prime Minister Mahinda Rajapaksa arrived in Dhaka on a State visit and met Prime Minister Sheikh Hasina.
Sri Lanka and Bangladesh both need a bilateral Preferential Trade Agreement (PTA) to boost trade and connectivity for ensuring greater mutual interest. This will make bilateral progress towards trade and investment between the two friendly South Asian countries. Bangladesh has always expressed its keen interest to sign a Free Trade Agreement (FTA) with Colombo to exploit the huge potential of bilateral trade between Bangladesh and Sri Lanka. If signing the FTA takes a long time, the two nations could sign a Preferential Trade Agreement (PTA). The PTA will begin with a shortlist of products that could open up opportunities for expanded trade, investment, and tourism in the future. But at first Bangladesh and Sri Lanka can sign a Preferential Trade Agreement initially to tap the untapped potential. Bangladesh and Bhutan signed a PTA on December 6, 2020. Now Bhutan and Bangladesh both are benefitting from the PTA.
Trade ties
Sri Lanka and Bangladesh should emphasize utilizing the huge trade potential between the two countries by signing a bilateral trade agreement. Both parties can increase cooperation in various fields including pharmaceuticals, IT, agriculture, maritime security, and disaster management. Bangladesh has already expressed keen interest to provide training to Sri Lankan nationals in the field of paddy production, climate adaption, disaster management, and Information Technology and urged Colombo to extend training programmes for Bangladeshis on marine fisheries and nursing.
According to 2019 data of the Bangladesh Export Promotion Bureau, the annual trade volume between Bangladesh and Sri Lanka is about US$ 13 Crore. Of this, Sri Lanka exports goods worth US$ 9.86 Crore while Bangladesh’s exports amount to about US$ 3.7 Crore. This trade volume could be increased easily if Sri Lanka and Bangladesh sign a FTA as soon as possible. Sri Lankan investors can invest more in Bangladesh Special Economic Zones, industrial parks, and high-tech parks.
Bangladesh can share with Sri Lanka its experiences in agriculture, particularly in rice farming and freshwater fisheries, its experiences in emergency response, disaster management, climate adaptation, and mitigation. Bangladesh can obtain technical know-how from Sri Lanka in coastal aquaculture, marine culture, and deep-sea fishing. In the education sector, both countries should have more institutionalized cooperation in capacity building, vocational training, and skills development.
In the case of the health sector, Bangladesh can put emphasis on core training of Bangladeshi nurses and other health professionals in Sri Lanka. Sri Lanka may benefit immensely by importing world-class pharmaceutical products and medical devices from Bangladesh in greater quantities. Basically, Bangladesh and Sri Lanka both would benefit from sharing experiences in the fields of agriculture, health, and education for mutual benefit.
Bangladeshi Prime Minister Sheikh Hasina and Foreign Minister Prof. G. L. Peiris
Bangladesh is moving forward on the path of rapid development. Sri Lanka should sign a trade agreement for ensuring its maximum business interest. Bangladesh produces garments, pharmaceuticals, cement, paper, electrical items, and jute goods, which are in high demand in Sri Lanka.
Bangladesh and Sri Lanka should identify potential investment sectors, including in the areas of Information Technology, agriculture, health, education, tourism, and services to tap the untapped potential. The investors of the two countries should come forward to exchange experiences of the development trends in the respective countries in the days to come.
PTAs and FTAs
FTA negotiations with Bangladesh have been in the works since 2013 and signing an FTA would mean a successful completion of this discussion. It is expected that the FTA will enable both countries to overcome tariff and non-tariff barriers that exist and therefore hamper trade between the two countries.
Signing PTAs and FTAs would help both Bangladesh and Sri Lanka to address the challenges in the trade sectors. The preferential trade deals will help boost exports significantly. Bangladesh also needs to sign several PTAs and FTAs before (Bangladesh’s) graduation, to reap the benefits of the Least Developed Country (LDC) category. Earlier, Both Bangladesh and Sri Lanka already agreed to sign the deal.
In 2017, both the countries had finished the required preparations to sign a FTA – but the initiatives did not see the light of the day due to internal issues. Currently, both should give priority to PTAs. To some extent, the FTA deal is very difficult. Some issues, including revenue losses, have been involved with FTAs as all products of both countries under FTAs enjoy duty-free facilities. Bangladesh and Sri Lanka have signed six Memoranda of Understanding (MoUs) to increase bilateral cooperation between the two South Asian countries. Now it is high for Sri Lanka and Bangladesh should sign a PTA as soon as possible to tap the potential. Then Bangladesh and Sri Lanka can move on the path of a FTA.
Sri Lanka is in an advantageous position in the value-added apparel industry, shipping lines and deep-sea port, financial services, ICT, and skilled technical people in different sectors. On the other hand, Bangladesh enjoys advantages in the apparel sector, skilled workforce in the garment sector, agricultural products, processed foods, and migrant workers. Bangladesh would be immensely benefited if the FTA is signed with Sri Lanka, as a portion of its exports and imports of goods are done through the Colombo Port. Sri Lanka also would benefit from signing the FTA. Although there are some complexities in the case of signing the ‘FTA’ deal, an effective diplomatic negotiation through dialogue can remove all the obstacles. Thus, Sri Lanka and Bangladesh should sign the PTA as soon as possible to tap the untapped potential to move forward on the issue of the FTA. Sri Lanka and Bangladesh could both benefit from initially signing the PTA and eventually, the FTA.
Pathik Hasan is a Dhaka-based NGO activist, researcher and freelance writer on contemporary international issues whose work has been published in many local and international publications. Academic background: BSS (Peace and Conflict Studies) and MSS (International Relations) under the University of Dhaka. He can be reached at [email protected].
Colombo Port
– Eurasia Review
– Daily News Sri Lanka
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