This is the first such agreement Bangladesh has signed with any country since independence in 1971
Bangladesh on Sunday signed its maiden preferential trade agreement (PTA) with Bhutan to boost bilateral trade between the two countries.
Commerce Minister Tipu Munshi and Bhutanese Economic Affairs Minister Lyonpo Loknath Sharma signed the agreement on behalf of their respective sides.
Prime Minister Sheikh Hasina and her Bhutanese counterpart Lotay Tshering witnessed the signing ceremony by joining the event virtually from their official residences in Dhaka and Thimphu respectively.
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The PTA with Bhutan is the first such bilateral preferential trade agreement Bangladesh signed with any country since its independence in 1971.
The signing was held on Sunday (December 6) to make the day memorable as on this day in 1971, Bhutan became the first country in the world to recognize Bangladesh’s independence.
Besides, the 50th anniversary of diplomatic relations between Bangladesh and Bhutan will also be celebrated on this day.
Some 100 Bangladeshi products will get duty-free access to Bhutan. These include baby clothes and clothing accessories, men's trousers and shorts, jackets and blazers, jute and jute goods, leather and leather goods, dry cell battery, fan, watch, potato, condensed milk, cement, toothbrush, plywood, particle board, mineral and carbonated water, green tea, orange juice, pineapple juice, and guava juice.
Meanwhile, 34 Bhutanese products that will get duty-free access to the Bangladeshi market include orange, apple, ginger, fruit juice, milk, natural honey, wheat or meslin flour, homogenized preparations of jams, fruit jellies, marmalades, food preparations of soybeans, mineral water, wheat bran, quartzite, cement clinker, limestone, wooden particle boards, and wooden furniture.
Both countries will be able to increase the number of items gradually through consultation.
The bilateral trade volume of the two countries was just $12.77 million in the fiscal year 2008-09 with Bangladesh’s exports to Bhutan amounting to $0.61 million while it imported goods worth $12.16 million.
The bilateral trade volume reached $49.65 million in the fiscal year 2018-19 out of which Bangladesh’s exports to Bhutan totalled $7.56 million against the imports of $42.09 million.
Emphasis on PTA, FTA
As Bangladesh looks forward to graduating out of the least developed country (LDC) status in 2024, it is increasingly emphasizing bilateral preferential trade agreement (PTA) and free trade agreement (FTA) to boost its export earnings in the next three to six years.
While an FTA stipulates free trade between countries, a PTA is much less broad covering preferential tariffs for a set of products or services.
Bangladesh, which got the status of lower middle-income country in 2015, currently benefits from preferential tariffs for its export of goods to some countries, but it might lose access to such lower trade terms once it graduates out of the LDC list by 2024, as per World Trade Organization (WTO) norms.
According to sources at the Commerce Ministry, even after getting a middle-income country status in 2024, Bangladesh would get three more years as "grace period" to avail all trade facilities enjoyed by an LDC nation. So, by 2027, Dhaka is aiming to boost its coffers through export earnings riding on LDC status.
Bangladesh has already started taking initiatives in this regard. According to the Commerce Ministry, the government is reviewing its various trade agreements with 44 countries to find out the possibilities of signing PTAs with them.
So far, Dhaka has approached 11 countries for inking FTAs with them. The responses from these countries have been positive, the sources said. Besides, significant progress has been made in signing PTAs with Nepal and Indonesia, and there might be signing of PTAs with Nepal and Indonesia by June next, according to the sources.