OIC Economies

Difference over inclusion of apparel delays signing of Bangladesh-Indonesia PTA

Published 23 Nov,2021 via The Financial Express - The signing of a preferential trade agreement (PTA) between Bangladesh and Indonesia is facing delays due to a difference over inclusion of Dhaka's apparel on the tariff concession list and also for the pandemic-related complexities, officials said.

The bilateral trade negotiation committee met last time in October last year and the talks have almost remained stalled since then.

At that meeting, Indonesia had submitted a list of 309 products where it wanted to grant tariff waiver to Bangladesh. However, Bangladesh's top export item, the apparel, was not included on the list - Dhaka raised the issue in the meet.

Indonesia at the meeting agreed to submit a revised list of products by including some of the Bangladesh made apparel items. However, the new list of products is yet to reach Dhaka.

On the other hand, the Bangladesh side agreed to grant tariff waiver to 304 Indonesian items in its market, ranging between 20 per cent and 100 per cent. Indonesia is expected to grant tariff waiver at a similar rate, the officials said.

In the meantime, amid the advancement of PTA talks between the two Muslim nations, Indonesia in February this year slapped safeguard duty, ranging between US$0.44 and $11.29 per piece, on export of a number of apparel items in its market from Bangladesh and its all MFN (most favoured nations).

The products include top garments (casual), top garments (formal), bottom garments, suits, ensembles and dresses, outwear, babies' garments and clothing accessories, and headwear and neckwear.

Following that, the government of Bangladesh, being a member of the World Trade Organisation (WTO), made an appeal to the WTO seeking remedy on the Indonesian safeguard duty.

In a recent development, Bangladeshi Foreign Minister AK Abdul Momen last week called upon his Indonesian counterpart Retno Marsudi for an early conclusion of the PTA.

A senior official at the Ministry of Commerce told the FE that Indonesia had to impose severe lockdowns on several occasions this year to contain the spread of Covid-19 pandemic.

Activities at both the public and private offices faced serious disruptions throughout the year, he said.

"Indonesian officials have recently informed us that they will soon send a revised product list on tariff waiver," the commerce ministry official said, preferring anonymity.

Bangladesh exports goods below US$100 million to Indonesia while imports from their value around $1.70 billion. Bangladesh's major export items to Indonesia include knitwear, jute yarn, and non-knit women's suits.

The main imports from Indonesia include palm oil, coal briquettes, sulphate chemical wood pulp, distillation products, manmade staple fibres, salt, stone, plaster, lime, cement, locomotives, rolling stock, cotton, and plastics.

Bangladesh signed a bilateral PTA with Bhutan in December last year, first of its kind since the country's independence back in 1971. However, the country is a member of several multilateral trade deals.

The two multilateral free trade agreements (FTAs) Bangladesh has signed so far are: South Asia Free Trade Area (SAFTA) Agreement and BIMSTEC FTA (Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation Free Trade Agreement).

On the other hand, three multilateral PTA deals where Bangladesh is a member are: Asia Pacific Trade Agreement (APTA), TPS-OIC (Trade Preferential Scheme among the member states of the OIC), and D-8 PTA (Developing-8 PTA).

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