Bilateral Trade Vietnam and Bangladesh

8/13/2019 Bilateral Trade Vietnam and Bangladesh

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ilateral Trade between angladesh and Vietnam

Prepared for

Dr. Abu Yousuf Md. Abdullah

Course Instructor: International Business Environment (L301)

Prepared byRakshanda Zihan

Roll No. 72 || Section: B

BBA || Batch 19th

Institute of Business Administration, University of Dhaka

November 18, 2013


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Table of Contents

Bilateral Trade .............................................................................................................................................. 3

Definition .................................................................................................................................................. 3

Advantages of Bilateral Trade Agreement ................................................................................................ 3

Bilateral Trade between Bangladesh and other countries ............................................................................. 4

Bilateral Trade Agreements of Bangladesh .............................................................................................. 4

Bilateral Trade between Bangladesh and Vietnam ....................................................................................... 6

Political Relations between Bangladesh and Vietnam .............................................................................. 6

Trade Relationship .................................................................................................................................... 6

Trade over the years .................................................................................................................................. 7

Export and Import ..................................................................................................................................... 7

Major Export Items in 2012-13 (In million US $) ................................................................................ 7

Major Import Items in 2010-11 (In million US $) ................................................................................ 7

Cooperation between two countries .......................................................................................................... 8

Bilateral cooperation mechanisms ............................................................................................................ 8

Bilateral Treaties and Agreements ............................................................................................................ 9

Government Initiatives to Promote Bilateral Trade with Vietnam ........................................................... 9

Bilateral Trade Agreement between Bangladesh and Vietnam: Future Plan .......................................... 10

Conclusion .................................................................................................................................................. 11


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Bilateral Trade

Definition

An exchange agreement between two nations or trading groups that gives each party favored

trade status pertaining to certain goods obtained from the signatories. The agreement sets

purchase guarantees, removes tariffs and other trade barriers. (Business Definition , 2013)

A bilateral trade agreement usually includes a broad range of provisions regulating the

conditions of trade between the contracting parties. These include stipulations governing customs

duties and other levies on imports and exports, commercial and fiscal regulations, transit

arrangements for merchandise, customs valuation bases, administrative formalities, quotas, and

various legal provisions.

Advantages of Bilateral Trade Agreement

Currently the world economy is experiencing a very serious economic crisis. World's leading

economies are suffering badly and working hard to overcome this crisis. Governments around

the world offered special rescue packages to help the entrepreneurs so that the economic

recession may not destroy their industrial sectors. The government of Bangladesh has also taken

a comprehensive package to tackle the possible effect of recession. But we must remember thatday comes after night. This recession may create opportunities for the growing economies to

have newer market access around the world.

Presently countries are to share mutual strengths and overcome mutual weaknesses through

combined efforts. As a result, countries are coming closer through various trade agreements like

regional free trade agreements, bilateral free trade agreement even through cross-regional free

trade agreements. Geographical distance is not an issue to act as a barrier today. ITC facilitates

one touch connection between two cross-regional business interests.

Signing bilateral free trade agreement is not only creating the condition for closer relations

among the nations but also providing a common platform to act in a united fashion in other

multilateral platforms like, multilateral trade negotiation in the World Trade Organisation

(WTO) and even in the global political arena under the UN. On the other hand, executing

bilateral free trade agreement is comparatively easier than the regional or multilateral ones.


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Bilateral Trade between Bangladesh and other countries

Bilateral Trade Agreement facilitates resource sharing and to have a unique voice in the other

forums. For example, during 11-17 May, 2009, this writer participated in an international

workshop on "South Asian Economic Integration: Ways, Tools and Methods" in the Orchard

Hotel, Singapore jointly organized the Asian Development Bank (ADB) and the Federation of

Indian Chambers of Commerce and Industry (FICCI). During dummy trade negotiation session

he found that, the young trade negotiators of Sri Lanka and India are talking from a common

ground. Each of them is supporting strongly the argument of the other.

It is because they are now closer to each other than any other South Asian States. They have a

bilateral trade agreement in action and they are going to further expand it into agreements on

investment and labour movement very soon. So it is quite clear that they will act together in realtrade negotiation table under the South Asian Free Trade Agreement (SAFTA) or in the WTO.

As a result small Sri Lankan economy will get a strong support from giant India in these arenas.

The BFTAs also facilitate technology transfer and free flow of investment for the least developed

countries (LDCs) like Bangladesh. These two are core elements of development of a country.

You may hardly get a single country except Bangladesh that is not having a bilateral free trade

agreement with any neighbors. Not only neighbors, currently countries are signing cross-regional

free trade agreements to ensure market access for their products abroad. This scribe may cite theexample of the Singapore-USA free trade agreement here. Our neighboring country India is also

negotiating one bilateral free trade agreement with Singapore. Hopefully it may be concluded

this year and will be executed from the next year. (Abdin, 2013)

Bilateral Trade Agreements of Bangladesh

Bangladesh's experience regarding the regional trade agreements: Bangladesh is involved in four

regional preferential trade agreements. Those are (Abdin, 2013):

Asia Pacific Trade Agreement (APTA) SAARC Preferential Trading Arrangement (SAPTA) Trade Preferential System among the Countries of OIC (TPS-OIC) Preferential Trading Arrangement among Developing-8 Countries (D-8 PTA)


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We had one bilateral preferential trade agreement (PTA) with Islamic Republic of Iran i.e.

"Preferential agreement Between Bangladesh and Iran". We are a member of two Free Trade

Agreements (FTAs). These are - South Asian Free Trade Area (SAFTA) and Bay of Bengal

Initiatives for Multi-Sectorial Technical and Economic Cooperation (BIMSTEC FTA).

None of the above is functioning well. So far as individual trade agreement is concerned, APTA

is still in a negotiation stage, SAPTA has been transformed into SFTA, TPS-OIC and D-8 PTA

would not be effective due to Turkey factor.

The only hope is AFTA, but until now intra-SAARC trade under SAFTA is less than 5.0 per cent

and countries are not fulfilling SAFTA commitments as stated. A long negative list, some non-

tariff barriers (NTBs), technical barriers to trade (TBTs) and geo-political factors are involved

behind the ineffectiveness of SAFTA.

From the above discussion it is clear that, implementing RFTAs has involved a slow process and

the progress may be halted by any country. On the other hand, implementing BFTA is quite easy

and depends only on two signatory states. So we should give more concentration on BFTAs

rather than waiting for multilateral or RFTAs. (Abdin, 2013)


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Bilateral Trade between Bangladesh and Vietnam

Vietnam is one of south-east Asias fastest-growing economies and has designs to become a

developed nation by 2020. A good trade relation with them can certainly bring economic

development and mutual benefits for both the countries.

As per the report of April 2013, trade between the two countries stands at $500 million a year,

with the balance heavily tilted in favor of Vietnam, whose exports to Bangladesh average $450

million.

Political Relations between Bangladesh and Vietnam

As soon as it gained independence in 1971, Bangladesh followed with keen interest and

supported Vietnams struggle against the U.S. The Government of Bangladesh condemned the

U.S.s bombing in the North of Vietnam. There was a strong nation -wide movement of the

Bangladeshi people to support Vietnams fighting against the U.S. Bangladesh was the first

country in South Asia and second one in Asia to recognize and establish diplomatic relations at

ambassadorial level with Provisional Revolutionary Government of the Republic of South

Vietnam. On February 11, 1973, Vietnam and Bangladesh officially established diplomatic

relations. The two sides started exchange of visits and economic and trade interaction. In July

1982, Vietnam closed its Embassy in Dhaka. (Vietnamembassy-Bangladesh, 2013)

In recent years, there have been new and important political and economic progresses in the

relations between Vietnam and Bangladesh. In November 1993, Bangladesh opened its Embassy

in Ha Noi. Vietnam re-opened its Embassy in Dhaka in January 2003.

Trade Relationship

Vietnam and Bangladesh maintain good cooperation at international fora namely United Nations,

Non-Aligned Movement and ASEAN. Bangladesh supported Vietnams candidature for non-

permanent membership of the United Nations Security Council. Bangladesh has requested

Vietnam to support its participation into ARF, MGC, ASEM and EWEC.


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Trade over the years

Table 1: Bangladesh- Vietnam Bilateral Trade Statistics (DCCI Research Cell , 2013)

** Values in Million Taka / (Value in Million USD)

Export and Import

Major Export Items in 2012-13 (In million US $)

Frozen Food (3.548), Agri-Products (3.71), Chemical products (7.624), Leather (12.147), Raw

Jute (3.287), Jute goods (2.757), Knitwear (0.147), Woven Garments (0.424), others (4.594).

(DCCI Research Cell , 2013)

Major Import Items in 2010-11 (In million US $)

Live animals; animal products (0.007), Vegetable products (336.35), Prepared foodstuffs;

beverages, sprits and vinegar; tobacco and manufactured tobacco substitutes (0.864), Mineral

products (60.853), Products of the chemical or allied industries (7.143), Plastics and articles

thereof; rubber and articles thereof (3.742), Wood and articles of wood; wood charcoal; cork and

articles of cork; manufactures of straw, of esparto or of other plaiting materials; basket ware and

wickerwork (1.135), Pulp of wood or of other fibrous cellulosic material; recovered (waste and

scrap) paper or paperboard; paper and paperboard and articles thereof (1.372), Textiles and

textile articles (26.019), Footwear, headgear, umbrellas, sun umbrellas, walking sticks, seat-

sticks, whips, riding-crops and parts thereof; prepared feathers and articles made there with;


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artificial flowers; articles of human hair (0.022), Articles of stone, plaster, cement, asbestos,

mica or similar materials; ceramic products; glass and glassware (0.309), Base metals and

articles of base metal (11.265), Machinery and mechanical appliances; electrical equipment;

parts thereof; sound recorders and reproducers, television image and sound recorders and

reproducers; and parts and accessories of such articles (6.610), Vehicles, aircraft, vessels and

associated transport equipment (1.182), Optical, photographic, cinematographic, measuring,

checking, precision, medical or surgical instruments and apparatus; clocks and watches; musical

instruments; parts and accessories thereof (0.21), Miscellaneous manufactured articles (2.178).

(DCCI Research Cell , 2013)

Cooperation between two countries

The cooperation between the two countries in other fields is still at low level, mainly focusing on

experience sharing in infrastructure development, small and medium enterprises, aquaculture and

environment protection. The two sides are trying to upgrade cooperation in economic and

commercial fields and others namely agriculture and fisheries, industry, handicraft, finance and

banking, culture, training and education, tourism and health in pace with good political relation.

(Vietnamembassy-Bangladesh, 2013)

Bilateral cooperation mechanisms

On March 10, 1997, Vietnam and Bangladesh signed an Agreement on Establishment of the

Joint Commission for Economic, Trade, Cultural, Scientific and Technological Cooperation. The

first meeting of the Joint Commission was held in Hanoi, Vietnam on February 6-7, 2006.

Bangladesh Delegation was led by H.E. Mr M. Saifur Rahman, Minister for Finance and

Planning, Government of the Peoples Republic of Bangladesh.

Vietnam and Bangladesh signed an MOU on political consultation between the two Ministries of

Foreign Affairs in 1994. In 2005, the two sides planned to hold the first political consultation

meeting in Dhaka, which was then postponed indefinitely due to unstable security situation in

Dhaka. (Vietnamembassy-Bangladesh, 2013)


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Bilateral Treaties and Agreements

Below are the list of current treaties and agreements between Bangladesh and Vietnam

(Vietnamembassy-Bangladesh, 2013)

Agreement on Aviation Transportation (1993) MOU on Political Consultation between two Foreign Offices (1994) Agreement on Economic and Scientific and Technological Cooperation (1994) Trade Agreement (1996) Culture Agreement (1997) Agreement on Establishment of the Joint Commission for Economic, Trade, Cultural,

Scientific and Technological Cooperation (1997)

Agreement on cooperation between Vietnam News Agency and National News Agency ofBangladesh (1997)

MOU on cooperation between Vietnam Chamber of Commerce and Industry and Federationof Bangladesh Chamber of Commerce and Industries (1997)

Agreement on cooperation in water resource development and flood management (1999) Agreement on visa exemption for diplomatic and official passport holders (1999) Agreement on double taxation avoidance (2004) Protocol on cooperation in agriculture (2004) Protocol on cultural exchange program for 2004-2007 (2004) Agreement on Investment Promotion and Protection (May 2005)

Government Initiatives to Promote Bilateral Trade with Vietnam

After the Prime Minister Sheikh Hasina visit in Vietnam in November 2012; Viet Nam and

Bangladesh aim to increase two-way trade to US$1 billion in the next five years, while also

further boosting bilateral ties in politics, security, defense, economics, trade and investment.

(Click Ittefaq, 2013)

Of the two agreements signed by the two countries, one related to the extension of the MoU

between Bangladesh and Vietnam on cooperation in the field of agriculture signed earlier on

March 22, 2004 in Dhaka.


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Another agreement was signed on the cooperation on establishment of the Bangladesh-Vietnam

Business Council and the Vietnam-Bangladesh Business Council between the Federation of

Bangladesh Chambers of Commerce & Industry (FBCCI) and the Vietnam Chamber of

Commerce and Industry (VCCI).

Of the remaining two MoUs, one was signed between the Ministry of Agriculture and Rural

Development of Vietnam and the Ministry of Fisheries and Livestock of Bangladesh in the field

of Fisheries and Livestock.

Another MoU was signed on trade promotion between the Vietnam Trade Promotion Agency

(VIETRADE) under the Ministry of Industry and Trade of Vietnam and the Export Promotion

Bureau (EPB) of Bangladesh. (Click Ittefaq, 2013)

A four-member Vietnamese delegation, led by Vietnamese Industry and Trade Minister Vu HuyHoang visited Bangladesh in April 2013, met the Industries Minister and discussed development

of industries in Bangladesh and Vietnam as well as increasing cooperation between the countries.

The Vietnamese Minister focused on increasing bilateral trade volume and investment between

Bangladesh and Vietnam.

According to the Economic Relations Division (ERD) officials, the issue of industrial

cooperation and joint venture as well as cooperation in agriculture, fisheries and livestock; water

resources; education; telecommunication; cultural; science and technology; human resources

development; shipping; health; youth and sports; media and information, civil aviation and

tourism will be discussed in the meeting. (The Independent , 2013)

Bilateral Trade Agreement between Bangladesh and Vietnam: Future Plan

The two countries agreed to further strengthen cooperation in agriculture and aquamarine

fisheries, trade, health, tourism, food security, investment, education, and science and

technology. Both parties expressed hopes that the mutual support would enhance in the years to

come, while underscoring the need for participation at each others trade fairs.

Vietnam will consider providing special tariff facilities on products of Bangladeshi small and

medium enterprises (SMEs) in entering its market, visiting Vietnamese Industry and Trade


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Minister Vu Huy Hoang Sunday said during his visit in Bangladesh in April 2013. (The Daily

Star, 2013)

Conclusion

Vietnam being one of the fastest growing countries of the world, mutually beneficial bilateral

trade agreements with them are perhaps very important for the economic growth of Bangladesh.

The prospect of bilateral trade between Bangladesh and Vietnam is certainly very bright and

Government initiatives of both the countries are noteworthy in regarding bilateral trade and

diplomatic relationship between the two countries.

As a developing country, Bangladesh must promote joint ventures between local andinternational corporations instead of allowing foreign corporations to run their business in

Bangladesh alone. Bilateral trade agreements ensure mutual benefits which has to include profit

and benefits for both the countries involved. So Bangladesh should try to promote domestic

industries and ease export process to Vietnam through bilateral trade agreements.


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References

1. Abdin, M. J. (2013, November 17).Financial Express. Retrieved fromhttp://www.thefinancialexpress-bd.com: http://www.thefinancialexpress-

bd.com/2009/06/19/70203.html

2. Business Definition . (2013, November 17). Retrieved fromhttp://www.businessdictionary.com/: http://www.businessdictionary.com/definition/Bilateral-

Trade-Agreement.html

3. Click Ittefaq. (2013, November 16). Retrieved from www.clickittefaq.com:http://www.clickittefaq.com/politics/bangladesh-signs-4-agreements-with-vietnam/

4. Click Ittefaq. (2013, November 17). Retrieved from http://www.clickittefaq.com:http://www.clickittefaq.com/politics/bangladesh-vietnam-agrees-to-increase-trade-

strengthen-bilateral-cooperation/

5. DCCI Research Cell . (2013, November 17). Retrieved from www.dcci.org.bd:http://www.dcci.org.bd/Bilateral/Vietnam-

Bangladesh%20Bilateral%20Trade%20Statistics.pdf

6. The Daily Star. (2013, November 16). Retrieved from http://www.thedailystar.net:http://www.thedailystar.net/beta2/news/bangladesh-vietnam-pledge-to-deepen-trade-ties/

7. The Independent . (2013, November 17). Retrieved from http://www.theindependentbd.com:http://www.theindependentbd.com/index.php?option=com_content&view=article&id=16337

6:bangladesh-vietnam-jc-meet-begins-to-boost-trade&catid=110:business-

others&Itemid=156

8. Vietnamembassy-Bangladesh. (2013, November 17). Retrieved fromhttp://www.vietnamembassy-bangladesh.org: http://www.vietnamembassy-

bangladesh.org/en/nr070521165956/news_object_view?newsPath=/vnemb.vn/cn_vakv/ca_tb

d/nr040819102403/ns071207151344

Documents

Bilateral Trade Vietnam and Bangladesh