Building Nexus with WTO Regime

Bangladesh is still tender in entering into reciprocal bilateral Preferential Trade Agreements in comparison with multilateral Preferential Trade Agreements. Bangladesh has already entered into several Regional Trade Agreements (RTAs) like Asia-Pacific Trade Agreement (APTA), South Asian Free Trade Agreement (SAFTA) and also multilateral Free Trade Agreements (FTAs) like BIMSTEC Framework Agreement. Most importantly they already have notified WTO under Enabling Clause. Even in respect of BIMSTEC Framework Agreement early notification has been performed. Since they notified WTO under Paragraph 4(a) of Enabling Clause, they secured special preferences under Enabling Clause. At the same time, they have stepped into the shoes of WTO Transparency Mechanism. 

Several bilateral Free Trade Agreements (FTAs) are in the offing for Bangladesh. Negotiations have launched for bilateral FTAs with specific countries like Pakistan, Sri Lanka. Trade agreement between Bangladesh and India has entered into force on 1st April, 2006. Entering into reciprocal bilateral agreements with trade giant would be an utmost challenge to sustain her ultimate interest.

Bangladesh has several possible scopes to enter into bilateral preferential trade agreement. At present the scope for establishment of reciprocal preferential trade agreements are being enshrined in Article XXIV of GATT 1994, Article V of General Agreement on Trade in Services (GATS) and Para 2© of Enabling Clause. Except Para 2©, Para 2 of Enabling Clause provides scope to enter into non-reciprocal Preferential Trade Arrangement (PTAs) in the form of General System of Preference (GSP).

Reciprocal preferential trade agreement under Para 2© of Enabling Clause encompasses special sanctity comparing with other mentioned scopes. Unlike GATT Article XXIV, it enables developing countries and least developed countries (LDCs) to enter into PTAs without eliminating internal barriers entirely and without covering all sectors of trade. Even under Para 2(d) of Enabling Clause, LDCs have been conferred special treatment. In particular, LDCs may be required to reduce tariff on a smaller scale than those required of other developing countries. Be a part of existing UN LDCs list, Bangladesh has profound scope to enter into reciprocal bilateral trade agreement under Para 2© of Enabling Clause. But Para 2© ousts developed countries totally from its ambit. Hence to enter into reciprocal preferential trade agreement with developed countries, only the stringent scope under GATT Article XXIV and GATS Article V is available for Bangladesh.  Thus she needs to be cautious in case of entering into bilateral reciprocal trade agreements with developed countries under stringent provisions.

Crucial challenge for Bangladesh may be the non-notification of the reciprocal bilateral agreements to the WTO. Though Bangladesh-India trade agreement entered into force on 1st April, 2006, it has not been informed to the WTO yet. Para 4(a) of Enabling Clause demands for the notification of establishment of preferential trade agreements to the WTO. 2006 Transparency Mechanism requires member countries to notify the trade agreement to WTO as early as possible. To incur beneficiary provisions under WTO covered agreement and to protect discriminations, a need for building strong nexus with WTO regime are evident. Notification procedure is such an efficient bridge to step into the shoes of WTO mechanism. Hence the performance of notification requirement is indispensable for bilateral preferential trade agreements to secure beneficial preferences under Enabling Clause and to be an effective part of WTO Transparency Mechanism.

Shuvra Dey
LL M, South Asian University, New Delhi.