It was expected that with the July 1, 2020 announcement of freer and quota-free access for Bangladeshi products to the Chinese market, bilateral trade, especially Bangladeshi exports, would be revamped. This does not happen. Bangladesh has a huge trade deficit with China.

Despite the fact that bilateral trade strongly favors China, Bangladesh has enormous potential that has yet to be tapped. With the further extension of duty-free quota-free access to China, we need to redouble our efforts with the required administrative, regulatory and infrastructural support. According to the notice of the China State Council Tariff Commission dated June 16, 2020, zero duty is applicable to 8256 products originating in Bangladesh (out of the total 8549 products). Of these, 5,161 elements bear the mention “LDC beneficiary country”, 2,911 elements bear the mention “ILDI beneficiary country” and 184 elements bear the mention “2LD2 beneficiary”. China has thus divided the LDC countries.

China imported goods worth $2.10 trillion in the first nine months of 2021 and exported $2.45 trillion in the same period. As the global economy rebounded, Chinese exports benefited from growing global market demand. The WTO has predicted that the volume of world merchandise trade will increase by 10.8% in 2021. Bangladesh can earn $21 billion if it can only hold a 1% share of Chinese imports.

Comparing Bangladesh’s exports with other countries, Vietnam exported $49 billion, India $19 billion, Malaysia $38 billion, Thailand $30 billion in 2020-21, while Bangladesh exported only $680 million over the period. From the statistics, it appears that in 2016-2017, exports were around one billion from Bangladesh, but the following year, exports decreased.

Some of Bangladesh’s major export items include textile accessories, raw leather, footwear, cotton waste, iron and steel waste, charcoal, fish and fish products, plastic articles, copper articles. Interestingly, China imports similar products from the above mentioned countries in huge quantity, say, more than US$1 billion, while Bangladesh’s exports are meager, around US$10-40 million. We have seen that after the emergence of COVID, China introduced a number of regulations related to health safety, especially regarding food products. Very recently, the General Administration of China Customs (GACC) introduced a mandatory registration policy for food products, with different levels of GACC requirements covering almost all types of imported food products. Certain items exported from Bangladesh require this registration, such as fish, vegetables and plant products and a number of primary and processed foodstuffs. Exporters have started to register. The relevant export support organization should provide full support to ensure that the registration process is completed quickly.

Initially, the exporters raised an issue about the certificate of origin, and it was understood that as the forms are issued from China, it is sometimes difficult to obtain the forms. However, the issue has been resolved now as the Embassy itself now provides the forms.

In all types of duty-free access, rules of origin are a major criterion. In the case of China, to be eligible for duty-free treatment under the DFQF, goods exported from LDCs will need to meet the following rules of origin: goods wholly obtained or manufactured in the beneficiary country; or incompletely obtained or manufactured in the beneficiary country but where the final substantial transformation is completed. In the case of LDCs, the added value is at least 35%, for the others it is 40%. As regards the value added criterion to be met, jute and jute products, charcoal, leather goods, textile products, cotton waste, iron and ore waste, plastic products have the potential to be exported to China. These products are imported by China from other developing countries. Bangladesh needs to take advantage of its potential to export these items in substantial volumes.

Goods originating in the beneficiary country which are transported to China via other countries or regions, with or without transhipment or temporary storage, are considered to be a direct shipment, provided that the goods are not subject to a trade or consumption; the goods do not undergo any operation other than unloading, reloading or any other operations necessary to keep them in good condition; the goods will be subject to the control of customs or the competent governmental authorities in these countries or regions; and goods entering other countries or regions should not stay longer than 6 months. In most cases, Bangladesh has to depend on other countries for exporting, which leads to delays due to cumbersome policies. Bangladesh needs to address these issues. A valid certificate of origin is another requirement. If customs has received the electronic information of a certificate of origin from a beneficiary country via an electronic data interchange system, importers are not required to present a certificate of origin for goods from that beneficiary country. . For goods subject to an advance ruling, importers can present a declaration of origin instead of a certificate, a commercial invoice for the goods, transport documents covering the entire journey from the beneficiary country to at ports of entry into China, etc.

For goods transported into the territory of China via other countries or regions, importers must present certified documents issued by the customs authorities of that country or region or other documents accepted by China customs. These documents mentioned above are not required when customs has obtained electronic information about the documents certified through the related electronic data system for transshipment.

It is clear that the electronic customs and port system is another requirement to become an efficient exporting country. Bangladesh is a signatory to the Trade Facilitation Agreement, but very few provisions have been implemented. An advance decision policy has been defined but its implementation is not sufficient. The same applies to authorized economic operators, the country should be sincere for a true electronic exchange of data.

The graduation of LDCs has created many opportunities, as well as a number of challenges. There is no guarantee of entering the EU’s GSP+ scheme when the EBA initiative expires after leaving the LDC group in 2026. There is no alternative but to exploit opportunities to increase exports to existing markets.

China has contributed a lot to the economic development of Bangladesh. Infrastructure development is one. We now need to carry out a detailed analysis to identify the potential products for which Bangladesh has the capacity to export to the huge Chinese market and at the same time develop the digital infrastructure required to exploit the opportunities.

Ferdaus Ara Begum is Managing Director of Business Initiative Leading Development (BUILD).

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