D-8 trade agreement to take effect in July

The D-8 member countries have agreed to implement the preferential trade agreement from July 1, keeping Bangladesh's proposal regarding the local value addition criteria hanging.

D-8, also known as the Developing-8, is an organisation for development cooperation among Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey.

Bangladesh has been demanding 30 percent local value addition for its goods to be exported to the D-8 nations. In other words, if Bangladesh can add just 30 percent value to the product locally, it will be considered as manufactured in Bangladesh.

The rest of the D-8 countries have agreed on 40 percent local value addition.

The declaration to implement the agreement came at the second Trade Ministers' Council Meeting held in Islamabad last week.

Commerce Minister Tofail Ahmed could not attend the meeting; a technical committee headed by Monoj Kumar Roy, additional secretary of the ministry, represented Bangladesh.

There will be a special meeting in March to discuss Bangladesh's proposal on local value addition, he said. “We hope the dispute on the issue will be resolved at that meeting.”

Bangladesh has to send a fresh proposal to D-8 members regarding its demand within a month, Roy said.

The establishment of D-8 was announced officially through the Istanbul Declaration of Summit of Heads of State on June 15, 1997.

But the pact could not come into force in the last 18 years due to the difference among the members on the issue of local value addition, also known as the rules of origin.

To determine the nationality of a product, the rules of origin criteria is used by the World Trade Organisation.

Once the origin of a product is known, the importing country can apply any country-specific or trade area-specific preferences or restrictions to the goods.

“There is no reason that Bangladesh as a least-developed country won't get the preferential trade benefits. The WTO allows an LDC 30 percent local value addition,” an official of the Tariff Commission said.

There are talks that LDCs will be given further benefits on local value addition as per a decision on the recently-held Nairobi ministerial conference, he said.

Operationalisation of the agreement would encourage the private sector and other economic actors of the D-8 nations to pursue more trade and economic activities with their counterparts in the member countries, contributing positively to enhancing the intra-trade.

An estimate shows effective collaboration between the D-8 governments, agencies and private sectors can take intra-trade to $500 billion by 2018.