Recently, China declared zero-duty for 97
percent of the Bangladeshi imports. The concession flowed from China’s duty-free,
quota-free programme for the Least Developed Countries
(LDC). This facility became operational from 1 July.
The Chinese move has been widely welcome
in the country and is considered as a major diplomatic victory in the bilateral
relations with China. Commentators and analysts have expressed optimism about the
increase in the Bangladeshi exports to China and further deepening of the economic
ties between the two countries, which is already going strong.
Since the Chinese decision coincided with
the military standoff with India, it attracted wide international attention. The
international community perceived the development to be a strategic move by China
and termed it as an attempt
to win Bangladesh, one of India’s close neighbours. However, amidst the hype surrounding the Chinese
decision, an insight into the China- Bangladesh relationship makes one wonder if
there is anything new to China’s declaration or it is just an extension of the existing
privileges for all LCD countries, also to Bangladesh.
All-weather
friend
The China-Bangladesh relationship started
in 1975, shortly after the assassination of Sheikh Mujibur
Rahman, Bangladesh’s first President and leader of the freedom struggle. Then on,
it has grown steadily over the last four decades.
Bangladesh considers China as an ‘all-weather
friend’ and the two countries have formed a strategic partnership. Also, Bangladesh
is a prominent partner of China’s flagship Belt and Road Initiative (BRI) in South
Asia.
Arguably, the economic ties have been a
key driver behind the flourishing of the bilateral relationship. China is the biggest
trading partner of Bangladesh and is the foremost source of imports. In 2019, the
trade between the two countries was US$18 billion and the imports from China commanded
the lion’s share. The trade is heavily in favour of China.
Given the large disproportionality in trade,
Bangladesh has been urging China to take measures to reduce the trade imbalance.
In 2015, China granted duty-free access to 3,095 Bangladeshi products to its markets.
The present declaration that granted 5,161 products is an addition to the prevailing
facilities. Bangladesh has also been enjoying preferential tariff facilities as
a member of Asia Pacific Trade agreement,
originally known as Bangkok agreement signed in 1975, which was rechristened in
its present name in 2005.
China had instituted the duty-free quota
privileges for the LDCs in 2010, and 24 countries were given this benefit initially.
In 2015, Bangladesh was partially given this facility. Sixty percent of its export
products were allowed to enjoy the zero-duty tariff scheme. Considering the deep
bond between the two countries, such a privilege should have been given to Bangladesh
much earlier. Often people were astonished at the hesitation of China, the world’s
second-largest economy worth $14 trillion, to grant Bangladesh zero-duty benefits
to all its products, a privilege granted by many countries much earlier.
The European Union (EU) was one of the first
to provide duty-free
access to Bangladeshi products under the Everything but Arms scheme
in 1973. The facility significantly contributed to improving the country’s trade.
The readymade garment (RMG) sector, primary an export-oriented industry, has been
the principal beneficiary of this advantage.
The EU is the largest buyer of Bangladeshi
RMG exports. Similarly, next-door neighbour India has
also given the duty-free access to Bangladeshi products in 2011, except for 25 narcotic
substances.
Delayed
posture
The Chinese move is considered largely a
delayed posture and the apprehension is about the length of the period Bangladesh
will be able to enjoy the privilege. Bangladesh is all set to become a middle-income
country (MIC) by 2024, and it’s promotion
to MIC will curtail all the LDC
privileges, including the duty-free facility. Hence, the Bangladeshi products are
likely to enjoy duty-free advantage only for a short period.
Given the short window available to the
country, there are doubt about the extent the privilege will contribute to narrowing
the trade deficits. Experience suggests that enhancing exports cannot be achieved
overnight and it requires time.
Recently, the Chinese
envoy to Bangladesh indicated to Bangladeshi businesses to
diversify their products and also enhance the quality to enjoy the benefit to its
optimal. Analysts in Bangladesh feel that the trade gap with China will continue
to grow. Dependence on China will also increase, primarily for the import of raw
materials.
Free
from comparison
It is uncanny to compare India and China.
Relationship between the two countries should be free of comparison with a third
country. The government of Bangladesh has been candid about its preference for promoting
peace and it has careful in nurturing a friendly relationship with all countries.
Nevertheless, the country gives special
emphasis to its relationship with China and India and the government should be credited
for maintaining a warm relationship with the two countries. Sharing of warmth with
the two major Asian countries has given Bangladesh dividend in the form of generous
development assistance from China and India. China has promised around US$ 30 billion
worth of financial assistance to Bangladesh. India has provided developmental assistance
of worth US$10 billion. Bangladesh is the largest recipient of India’s total of
US$30 billion developmental assistance offered to countries globally.
Comparing one against other creates unnecessary
confusion. Here media and civil society could take a leading role in formulating
a nuanced analysis of the issues and contribute to creating a positive environment.
Also, prosperous nations have to shoulder responsibility, especially, in dealing
with countries having asymmetries.