Russia and Bangladesh Take Trade Steps Towards An EAEU Free Trade Agreement
Dhaka and Moscow have signed an agreement this week on establishing an Intergovernmental Commission (IGC) on trade, economic, scientific, and technical cooperation, which in turn, will provide an effective platform for advancing the bilateral trade and economic cooperation between the countries. Bangladesh is situated between India, China and ASEAN and is developing as a major regional economic tiger.
Bangladeshi businessmen have stressed simplified banking cooperation including currency swap agreements between the two central banks of Bangladesh and Russia to help expand bilateral trade between the two nations.
However, cross-border payment has been one of the long-standing issues when it comes to repatriation of profits or payments to vendors. The issue relates intricately with the capital account being not open in Bangladesh. Bangladesh banks been taking such payments on a case by case basis and different businesses/companies have pursued such payments depending on the clout that they have with different sections of the Government. This has developed as a financial bottleneck for foreign investors currently operating in Bangladesh, and banking reforms to open up the capital account will have to be one of the first steps towards a more streamlined cross-border payment system.
Habib Ullah Dawn, president, Commonwealth of Independent States – Bangladesh Chamber of Commerce and Industry (CIS-BCCI), held the trade meetings with Aleksandr Rybas, trade representative of Russia in India, accredited with responsibility to Bangladesh on Tuesday.
“The existing banking system between Bangladesh and Russia needs to be simplified to help expand the bilateral trade between the two counties that is below potentials,” said Habib Ullah Dawn.
Current Russia-Bangladesh trade is around US$1.1 billion, although trade between the two has increased. In the 2018- 2019 financial year Bangladesh exported US$ 548.26 million worth of merchandised products to Russia. In 2019-20 it was US$485.23 million due to the impact of Covid. Fundamental trends though are up.
On the other hand, Bangladesh imported US$653.05 million worth of products from Russia in 2018-2019, higher than the US$629.8 million in 2017-18. Bangladesh mainly exports apparel items, jute, frozen foods, tea, leather, home textiles and ceramic products to Russia. There is a huge scope for export of sea foods, potato, and pharmaceutical products in Russian markets. The country’s imports from Russia include cereals, minerals, chemical products, plastic products, metal, machinery, and mechanical equipment. Russia exports capital machineries, fresh and dried fruits, and raw sugar.
Ullah said that Dhaka and Moscow signed an agreement on establishing the Intergovernmental Commission (IGC) on trade, economic, scientific, and technical cooperation, which in turn, will provide an effective platform for advancing the bilateral trade and economic cooperation between Russia and Bangladesh.
He also strongly suggested the setting up of necessary trade infrastructures including warehouses and distribution networks to bring the goods and services near the consumers at both ends. He emphasized taking up joint action for the harmonization of mutual trade rules, regulatory measures and streamlining bilateral institutional cooperation in the respective fields and highlighted various activities of CIS-BCCI to explore the potential of the CIS market including Russia as a third market of Bangladeshi exports after the US and the EU.
“The free trade agreement (FTA) with the Eurasian Economic Union (EAEU) also will provide duty-free access to Russia on a reciprocal basis,” he said. The EAEU includes Armena, Belarus, and Russia along with Kazakhstan and Kyrgyzstan, and are all markets (a combined pooulation of 183 million with a GDP of US$5 trillion) that Bangladesh can access via the INSTC.
Dr Aleksandr Rybas reciprocated the spirit of cordial bilateral trade relations and assured the chamber of forwarding the suggestions to the Russian government.
He hoped that Intergovernmental Commission (IGC) will hold the next meeting in December and take follow-up action on these pertinent issues.
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