On one hand Australia is planning to lift its ban on direct cargo flights from Dhaka, which it imposed in December 2015 on account of security at the Hazrat Shahjalal International Airport, which is expected to increase Bangladesh’s shipments, even as on the other hand, officials of Bangladesh and Australia will meet in Dhaka this month to finalise the draft of a Trade and Investment Framework Agreement (TIFA) – a deal establishing a framework for the expansion of trade and removal of investment barriers between the two countries.
The Commerce Ministry officials are of the opinion that TIFA will remove trade barriers, attract more Australian investments and help increase Bangladesh’s exports to Australia while the deal will also help Bangladesh retain trade facilities even after it graduates to the status of a developing country.
Meanwhile, Bangladesh High Commissioner to Australia Mohammad Sufiur Rahman on his part added, “Australia is interested in Bangladesh and we will have to prepare well to face the challenges of the post-Least Developed Country (LDC) era, when we may lose preferential market access and hence we ought to engage Australia well in advance to ensure that such favourable treatment continues under a bilateral arrangement,” while also reportedly adding that once the deal was signed, the volume of bilateral trade between the two countries would reach US $ 5 billion soon.
There’s no denying the fact that Bangladesh and Australia share a very close relationship. To put things in perspective, Australia was among the first countries to recognise Bangladesh after it achieved independence in 1971. Shortly after, on 31 January 1972, Australia reportedly established its resident mission in Dhaka, and since then both share a strong development and trade relationship.
Bangladesh, in the meanwhile, has also achieved impressive economic growth in the last decade (averaging over six per cent) and plans to graduate from Least Developed Country status in 2024 even as Australia and the former intend to pursue new opportunities to promote trade and investment so as to support a shared economic recovery from COVID-19.
In 2018-19, Australia’s two-way goods and services trade with Bangladesh grew to over US $ 2.5 billion, with two-way trade in goods valued at US $ 1.9 billion. If agricultural products and cotton are among Australia’s key merchandise exports to Bangladesh, apparels and textiles are key exports from Bangladesh to Australia.
As LDC products from Bangladesh enter Australia duty-free and quota-free riding on the trade privilege, Bangladesh has been able to turn Australia into a major export destination. As per reports, in fiscal 2018-19, garment exports from Australia alone amounted to US $ 719.78 million. However, owing to the fallouts of the Coronavirus pandemic, it declined to US $ 601.14 million in fiscal 2019-20 while in the fiscal 2017-18, the apparel export was recorded at US $ 634.01 million, according to data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) while among the major Australian garment buyers sourcing from Bangladesh are names like Kmart, Australian Woolworths and Target Australia.
Now, to take this relationship a step further, Bangladesh and Australia are expected to work on a new trade deal and finalise the draft of TIFA. According to Commerce Secretary Md Jafar Uddin, Bangladesh has proposed some changes to the initial draft prepared by Australia.
“On the amendments, the Australian Department of Foreign Affairs and Trade wrote to us requesting a meetin g with the Australian High Commissioner in Dhaka,” Md Jafar Uddin reportedly underlined while talking to the media earlier.
Under the terms of the draft, the two countries will seek strengthened trade and investment through bilateral cooperation in mutually arranged sectors, such as textiles and apparels, manufacturing, information and communication technology, skill development and education services even as the participants will endeavour to take appropriate measures to encourage and facilitate trade and investment between Dhaka and Canberra.
It may be mentioned here that in 2017, Australia signed TIFA with Sri Lanka while Bangladesh went for a similar trade agreement with Russia while according to Commerce Ministry officials, Bangladesh currently enjoys duty-free exports to Australia. However, despite the market facility being in place, Bangladesh’s exports to Australia have not reportedly reached the desired levels.
In the last fiscal year, Bangladesh’s exports to Australia amounted to US $ 678 million, which is more than 2 per cent of Bangladesh’s total export earnings — Bangladesh mainly exports woven garments, knitwear and home textiles to Australia — while in the previous fiscal year, the export volume was reportedly more than US $ 800 million.
Meanwhile, Commerce Ministry officials are of the opinion that TIFA will remove trade barriers, attract more Australian investments and help increase Bangladesh’s exports to Australia. Moreover, the deal will also help Bangladesh retain trade facilities even after it graduates to the status of a developing country even as under the proposed agreement, the two countries will form separate trade and investment committees comprising officials from their Foreign and Commerce Ministries and the High Commissioners based in Canberra and Dhaka.
The committee meetings will identify issues in bilateral trade and investment, and will work to address them. Even though the draft prepared by Australia mentions a five-year deal, the Bangladesh High Commission in Canberra has suggested a longer-term agreement.
The Bangladesh High Commission in Australia, in the report to the Commerce Ministry, reportedly maintained that Australia was shifting its current focus to business expansion beyond traditional markets in China, Japan, South Korea and ASEAN (Association of Southeast Asian Nations) due to the strategic tensions with China and plateauing of demands elsewhere.
“South Asia in general is getting greater focus, though there is a risk of India being considered synonymous with South Asia in Australian thinking and Bangladesh may thus get bypassed,” the report underlined.
However Mohammad Sufiur Rahman referred to some recent developments, such as the Australian Foreign Minister’s Dhaka visit in 2019 after a gap of over 20 years, Australia’s support for Bangladesh on the Rohingya issue and the country’s revision of its travel advisory for Bangladesh. “These are indications of keenness on the part of Australia to engage Bangladesh more as a partner in the Indian Ocean region, which is becoming important from both economic and strategic considerations,” he reportedly maintained.
Urging the Commerce Ministry to decide on the agreement with Australia similar to the Bangladesh-USA Trade and Investment Cooperation Forum Agreement TICFA, the Bangladesh envoy underlined, “A delay will certainly make things difficult.”
Meanwhile, in another positive development that is expected to boost Bangladesh’s shipments to Down Under, Australia is reportedly planning to lift its ban on direct cargo flights from Dhaka. “The Australian Government has already taken an initiative to amend rules. There are also some other procedures. Direct flights will resume after the completion of the procedures,” underlined the Australian High Commissioner to Bangladesh, Jeremy Bruer, while interacting with the media recently.
It may be mentioned here that the country of the southern hemisphere was the first to impose the ban in December 2015 citing a lack of security at the Hazrat Shahjalal International Airport in Dhaka even if four-and-a-half months later, it was relaxed, with Bangladeshi freights having to be re-screened in a third country before it could be allowed to reach Australia.
The recent developments — lifting of ban on direct cargo flights from Dhaka and the meeting related to the Trade and Investment Framework Agreement (TIFA) — is expected to boost Bangladesh exports, which in particular would be a good news for the apparel exporters of the country, who have had to withstand various challenges owing to the fallouts on account of the Coronavirus pandemic, especially on the export front.
