GLOBALISATION has made international trade very competitive. The World Trade Organization (WTO) member countries are facing various barriers to trade promotion. Due to the time-consuming process of removing the barriers, many countries are now thinking of alternatives like regional and bilateral free trade agreements for duty-free market access for many of their products.
The European Union (EU), considered a model of regional integration, has emerged as an economic power. It acts as a unit in
Regional trade and economic cooperation in South Asia
Md. Joynal Abdin
Assistant Secretary (WTO, RTA & FTA)
The Federation of Bangladesh Chambers of
Commerce and Industry (FBCCI)
Federation Bhaban, 60 Motijheel C/A
Dhaka ? 1000, Bangladesh
Globalization polarized the world and made international trade very
competitive. Each and every country is trying to exploit whatever trade
opportunities are available. The World Trade Organisation (WTO) contracting
countries are facing various barriers to trade promotion. Due to bureaucratic
and time-consuming process of removing the barriers, many countries are
now thinking of alternatives like regional and bilateral free trade agreements
for duty-free market access for many of their products.
The European Union (EU), considered a model of regional integration, has
emerged an economic power. It acts as a unit in various international bodies
lik the UN d h WTO.
The South Asian leaders formed South Asian Association for Regional
Cooperation (SAARC) and adopted South Asian Preferential Trading
Arrangement (SAPTA) and South Asian Freed Trade Agreement (SAFTA),
keeping this in mind. The SAFTA came into effect January 01, 2006 for free
trade among the eight SAARC member countries: Afghanistan, Bangladesh,
Bhutan, India, Nepal, Maldives, Pakistan and Sri Lanka. South Asia is miles
from the cherished goal of free trade.
Bangladesh must study and analyse the opportunities and disadvantages of
business under the SAFTA. The business community must strengthen their
strengths to take opportunities of the SAFTA and prepare to overcome their
weakness to avoid its disadvantages.
Bangladesh does need to assess properly the possible effects of SAFTA on
its trade with other SAARC member-countries, whether or not it would
increase trade, if not why? Bangladesh should raise the issue of its major
exportable products in the negative list in the next trade negotiations with
the SAARC countries under the SAFTA. It should study the barriers its
businessmen are facing in doing business with the other SAARC countries to
pinpoint the measures to make SAFTA more effective.
The study should concentrate on analysing the possible impact the SAFTA
would have on Bangladesh's trade with the SAARC countries. It should
identify Bangladesh's major exportable products in the negative or sensitive
list of the SAARC countries, so that it can take up the issue in next trade
Bangladesh should identify major barriers to intra-SAARC trade. It should
take up the issue of making SAFTA an effective regional trade arrangement
by removing the problems.
The study should identify the opportunities and disadvantages of the SAFTA.
However, an in-depth study requires for a researcher to travel all the SAARC
countries to meet their ministers and officials to get their views on the issues
involved. This is possible only when the required statistics is available.
Bangladesh's trade with SAARC countries
(U.S $ in
Year SAARC Countries World Percentage
1997/98 1160.77 12696 9.14 %
1998/99 1444.80 13342 10.82 %
199/2000 1040.40 14155 7.35 %
2000/2001 1402.46 15830 8.85 %
2001/2002 1183.29 14526 8.14 %
2002/2003 1563.41 16206 9.64 %
2003/2004 1885.76 18457 10.21 %
2004/2005 2398.87 21832 10.98 %
2005/2006 2342.41 25272 9.26 %
2006/2007 2855.04 29123 9.80 %
2007/2008 4155.71 35735 11.62 %
Bangladesh's trade with SAARC countries is rising slowly though, interrupted
at times. But this trade under the SAFTA has not risen as it should have.
However, Bangladesh?s trade with rest of the world has risen sharply. It
means SAFTA has brought no significant beneficial effect for Bangladesh
Bangladesh exports to, and
imports from SAARC countries
Fiscal Year Import FromExport to
1997/98 1036.58 124.19
1998/99 1340.27 104.53
199/2000 937.48 102.92
2000/2001 1299.04 103.42
2001/2002 1092.73 90.56
2002/2003 1439.17 124.24
2003/2004 1734.71 151.05
2004/2005 2171.58 227.29
2005/2006 2026.12 316.29
2006/2007 2486.47 368.57
2007/2008 3696.39 459.32
While Bangladesh's imports from SAARC countries have increased
significantly after the SAFTA was activated, but its exports have not
Comparison between Bangladesh's export to SAARC countries and world,
before and after SAFTA was activated:
Fiscal Year Export toExport to World Percentage of
SAARC Market Export
1997/98 124.19 5172 2.40 %
1998/99 104.53 5324 1.96 %
199/2000 102.92 5752 1.78 %
2000/2001 103.42 6467 1.59 %
2001/2002 90.56 5986 1.51 %
2002/2003 124.24 6548 1.89 %
2003/2004 151.05 7603 1.98 %
2004/2005 227.29 8655 2.62 %
2005/2006 316.29 10526 3.00 %
2006/2007 368.57 12177 3.02 %
2007/2008 459.32 14110 3.25 %
Under the SAFTA arrangement, every member-country retains the right to
protect its industry by imposing restrictions on imports. The list of restricted
products is known as the sensitive list of negative items. The big negative list
under the SAFTA calls for a careful study and review.
The following are the major exportable products of Bangladesh in the
negative list of the other SAARC countries under the SAFTA regime.
01. Woven Garments ? HS Code ? 5208.11.00 ? 5911.40.00
02. Knitwear ? HS Code ? 6101.20.00 ? 6310.90.00
03. Lather Goods & Foot wars ? HS Code ? 4107.11.00 ? 6406.99.00
04. Ceramic Products ? HS Code ? 6901.00.00 ? 6914.90.00
05. Jute & Jute Goods ? HS Code ? 5601.10.10 ? 5705.00.90
06. Tea ? HS Code ? 0902.10.00 ? 0902.40.00
07. Handicrafts ?HS Code - 4202.11.00
08. Calendars ? HS Code ? 4910.00.00
09. Bicycle ? HS Code ? 8714.11.00 ? 8714.99.00
10. Pharmaceuticals Product ? HS Code ? 3001.20.00 ? 3006.92.00
11. Meat ? HS Code ? 0201.10.10 ? 0210.99.20
12. Vegetables ? HS Code ? 0601.10.00 ? 0801.11.00
13. Ship (Finished Vessels) ? HS Code ? 8901.10.10 ? 8908.00.90
Afghanistan listed 18 major exportable products of Bangladesh in its negative
list under the SAFTA regime. They include RMG, ceramics and handicrafts
The negative list of Pakistan contains 39 major exportable products of
Bangladesh. They include RMG, green tea, light engineering products, bicycle
The negative list of India under the SAFTA regime contains 27 major
exportable products of Bangladesh. They include RMG, textile materials,
fotwear?s, meat, sports item, ceramic and tiles etc.
The negative list of Nepal under the SAFTA regime contains 49 major
exportable products of Bangladesh. They include RMG, textile materials, tea,
ceramic and tiles etc.
The negative list of Bhutan under the regime contains six major exportable
products of Bangladesh. They include RMG, textile, and green tea.
The negative list of Sri Lanka under the SAFTA contains 53 major exportable
products of Bangladesh. They include meat, tea, textile, ceramics,
households, and RMG.
The negative list of the Maldives under SAFTA regime contains 12 major
exportable products of Bangladesh. They include fishing vessels, RMG, tea
and jute products.
The other SAARC countries use very high rate of tariff structure as tariff
barriers to obstruct imports.
There are also non-tariff barriers to trade in the SAARC region. These
include: a. Lack of Trust; b. Lack of Land Connectivity; c. Transit Crisis; d.
Lack of Inter Border Transportation Entrance; e. Complicated VISA system; f.
Political Conflict; g. Lack of ICT support and h. Large Negative List.
However, the SAFTA can be more effective if the agreements thereof are
properly implemented, the tariffs are reduced for intra-SAARC trade, the
non-tariff barriers are removed, the negative lists are shortened and the
private sector representatives are involved in the negotiations.
A SAARC task force does need to identify the problems for taking remedial
actions. If a coordinated common economic policy is taken and a regional fund
is created to promote poverty reduction, economic cooperation among the
member-countries of the SAARC can be strengthened. [The writer is
Assistant Secretary of the Federation of Bangladesh Chambers of Commerce
and Industry (FBCCI)]