Foreign trade policy overview:
1. Import based economy: we import each and every daily necessary products. Even Products like rice, wheat, bean, onion, garlic etc. are also have to be imported to meet up demand. Max amount of them are imported from india.
2. According to WTO: our trade policy is not mkt oriented, our products are not diversified, our economy is not worldwide linked in. so that financial breakdown cannot harm our economy.
3. Merchandise export: Export merchandising is a method of offering retail goods for sale in a foreign consumer market. Many large companies across the country maintain entire divisions devoted to finding ways to better enter foreign retail markets through export merchandising to increase profit and sustain growth. But in our country we buy raw materials produce product and sale them. This is not merchandising. merchandising is the practice and process of displaying and selling products to customers. Whether digital or in-store, retailers use merchandising to influence customer intent and reach their sales goals.
#free market: In economics, a free market is a system in which the prices for goods and services are determined by the open market and by consumers. In a free market the laws and forces of supply and demand are free from any intervention by a government, or by other authority.
Proponents of the concept of free market contrast it with a regulated market, in which a government intervenes in supply and demand through various methods — such as tariffs — used to restrict trade and to protect the local economy. In an idealized free-market economy, prices for goods and services are set freely by the forces of supply and demand and are allowed to reach their point of equilibrium without intervention by government policy.
#for free mkt economy we need
1. Reducing trade distortion:
Distortion is an economic scenario that occurs when there is an intervention in a given market by a governing body. The intervention may take the form of price ceilings, price floors or tax subsidies. Trade distortion is prohibition trading particular product or trading with particular person. Minimization of trade distortion will increase the amount of export. Where distortion is less, economy becomes booming economy
2. Anti-export biased:
Bias of growth refers to economic growth through factor accumulation and/or technological progress and whether it favors one sector or another. Growth is said to be export biased if the export sector expands faster than the rest of the economy, import biased if the import-competing sector does so. Anti-export biased ness refers to at first fulfill internal country demand and then export if excess amount of inventory is in your stock.
3. Ensuring greater integration or entry to multilateral trading:
MTS (Multilateral Trading System) The system which allows large numbers of countries to agree to trade with each other. The World Trade Organisation (WTO) is part of this system. Trade is a driver for economic growth and sustainable development.
From the early days of the Silk Road to the creation of the General Agreement on Tariffs and Trade (GATT) and the birth of the WTO, trade has played an important role in supporting economic development and promoting peaceful relations among nations.
Multilateral trade agreements are commerce treaties between three or more nations. The agreements reduce tariffs and make it easier for businesses to import and export.
We can entry to greater trading system through creating business cartel. We can ensure greater economic advantage and GDP growth through business cartel. We have a great number of human resource which is comparatively cheap which is main interest for other countries for making trading cartel involving us.
4. Low tax/ vat collection:
Tax and vat are used to restrict trade and to protect the local economy.
Taxation is considered as the principal source of government earnings, revenue is considered as the fuel of government machineries. In other word it could be said that, government earns through taxation and spend it to provide multidimensional services like security, social safety, health care, road, bridges, transport, education so on and so forth services. Therefore government usually emphasis on enlarging the tax coverage and tax providers net.
Vat is broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption within the country. Thus, goods which are sold for export or services which are sold to customers abroad are normally not subject to VAT. Conversely imports are taxed to keep the system fair for country producers so that they can compete on equal terms on the local market with suppliers situated outside the mkt.
We are not able to ensure tax or vat. Business people intentionally import product and don’t receive to skip tax and later purchase without tax from port authority when the products are sold through auction. We cannot progress till this kind of unethical activity of business people goes on.
#Trade policy framework: there are 3 levels- top level, middle level, bottom level.
- Top level: WTO is in the top level of trade policy framework. With the creation of the WTO in 1995, many scope was extended for trading. The WTO provides quantitative information in relation to economic and trade policy issues. Its data-bases and publications provide access to data on trade flows, tariffs, non-tariff measures (NTMs) and trade in value added.
- Middle level: SAARC, SAFTA, BIMSTEC, Asia pacific trade agreements are in this part. SAARC: The South Asian Association for Regional Cooperation (SAARC) was established with the signing of the SAARC Charter in Dhaka on 8 December 1985. SAARC is the regional intergovernmental organization and geopolitical union of nations in South Asia.
dedicated to economic, technological, social, and cultural development emphasizing collective self-reliance. Its seven founding members are Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka. Afghanistan joined the organization in 2007. Meetings of heads of state are usually scheduled annually; meetings of foreign secretaries, twice annually. Headquarters are in Kathmandu, Nepal.
The 11 stated areas of cooperation are agriculture; education, culture, and sports; health, population, and child welfare; the environment and meteorology; rural development (including the SAARC Youth Volunteers Program); tourism; transport; science and technology; communications; women in development; and the prevention of drug trafficking and drug abuse. The charter stipulates that decisions are to be unanimous and that “bilateral and contentious issues” are to be avoided.
The Eighth Meeting of SAARC Finance Ministers was held in Islamabad on 26 August 2016 to review progress in the implementation of their earlier decisions. The Meeting emphasized the need for:
a. Accelerating the process towards South Asian Economic Union (SAEU) in a phased and planned manner as mentioned in the Declaration of 18th SAARC Summit.
b. Ensuring implementation of decisions recommended by the Member States at various SAARC mechanisms in order to realize the goals of SAARC Charter to promote the welfare of the people of South Asia and to accelerate economic growth, social progress and cultural development in the region.
c. Strengthening regional trade through full and expeditious implementation of South Asian Free Trade Agreement (SAFTA) in order to achieve deeper integration and move towards SAEU and also to bring down tariffs, eliminate NTBs/PTBs, reduce sensitive lists for enhanced intra-regional trade under SAFTA;
d. Operationalize the SAARC Agreement on Trade in Services without further delay by finalizing the schedules of specific Commitments;
e. Finalize Text of the SAARC Agreement on Promotion and Protection of Investments;
f. Initiate discussion on widening the scope of SAARC Agreement on Avoidance of Double Taxation and Mutual Administrative Assistance in Tax Matters.
g. Emphasized the need for harmonization of customs procedures and documentations in the region to facilitate movement of goods across the borders.
h. Underlined the need for improved connectivity in the region including through land, sea and air route and early signing of Motor Vehicle and Railways Agreements.
i. Strengthen Social Window and operationalize Economic and Infrastructure windows of SAARC Development Fund (SDF) so that tangible benefits are visible on the ground.
j. Enhanced intra-regional investments with a view to bridge the large infrastructure financing gap in the region;
Safta; The South Asian Free Trade Area (SAFTA) is an agreement reached on January 6, 2004, at the 12th SAARC summit in Islamabad, Pakistan. It created a free trade area of 1.6 billion people in Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka (as of 2018, the combined population is 2.08 billion people, about 27% of the world's population of 7685459000 ). The seven foreign ministers of the region signed a framework agreement on SAFTA to reduce customs duties of all traded goods to zero by the year 2016.
The main objective of the agreement is to promote competition in the area and to provide equitable benefits to the countries involved. It aims to benefit the people of the countries by bringing transparency and integrity among the nations. SAFTA was also formed in order to increase the level of trade and economic cooperation among the SAARC nations by reducing the tariff and barriers and also to provide special preference to the Least Developed Countries (LDCs)among the SAARC nations.
Bimstec: The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is an international organisation of seven nations of South Asia and South East Asia, housing 1.5 billion people and having a combined gross domestic product of $3.5 trillion (2018).
The BIMSTEC member states—Bangladesh, India, Myanmar, Sri Lanka, Thailand , Nepal and Bhutan [5]—are among the countries dependent on the Bay of Bengal.
Fourteen priority sectors of cooperation have been identified and several BIMSTEC centres have been established to focus on those sectors.[3][6] A BIMSTEC free trade agreement is under negotiation (c. 2018).
Leadership is rotated in alphabetical order of country names. The permanent secretariat is in Dhaka. There are 14 main sectors of BIMSTEC along technological and economic cooperation among south Asian and southeast Asian countries along the coast of the Bay of Bengal.[4]
1. Trade & Investment
2. Transport & Communication
3. Energy
4. Tourism
5. Technology
6. Fisheries
7. Agriculture
8. Public Health
9. Poverty Alleviation
10. Counter-Terrorism & Transnational Crime
11. Environment & Disaster Management
12. People-to-People Contact
13. Cultural Cooperation
14. Climate Change
- Bottom Level : our ministry of finance, ministry of commerce and industry are included in this level.
Ministry of finance: The Ministry of Finance (Bengali: অর্থ মন্ত্রণালয়; Artho Montronaloya) is a ministry of Bangladesh.[2] The ministry is responsible for state finance, including the state budget, taxation and economic policy in Bangladesh. It is led by the Finance Minister of Bangladesh. The department must report to the Parliament of Bangladesh. It contains four divisions:
• Finance Division
• Economic Relations Division
• Internal Resources Division
• Bank and Financial Institutions Division
Ministry of commerce and industry: The Ministry of Commerce (Bengali: বাণিজ্য মন্ত্রণালয়; Bāṇijya mantraṇālaẏa) is a ministry of Bangladesh.[2] The ministry is responsible for regulation and implementation of policies applicable to domestic and foreign trade.
#Trade policy development and implementation:
1. custom tariff a tax paid on goods imported into a country: lower/reduce customs tariffs. Barriers to trade were abolished and a common customs tariff was set up. Custom tariff would be 19.4% on and average to increase export.
2. Removal of pre-shipment inspection: The Pre-Shipment Inspection (PSI) is one of many types of quality control inspections conducted by related authority. It is an important step in the quality control process and is the method for checking the quality of goods before they are shipped. This sometimes harassment for exporters and prohibits from exporting.
3. Removal of regulatory duty and supplementary duty: regulatory duty- Import duty is a tax collected on imports and some exports by a country's customs authorities. It is usually based on the imported good's value. Depending on the context, import duty may also be referred to as customs duty, tariff, import- tax or import tariff.
Supplementary duty- Luxury goods non-essential and socially undesirable goods and the other goods and services upon which imposition of supplementary duty is justified in the public interest. Supplementary duty at the rate specified shall be imposed on such goods and services.
Difference:
* supplementary- Tax for implementing something. E.g. tax for adding further floors in a building.
*regulatory- duty for importing anything. E.g. tax for importing a car.
*Supplementary - there is supplementary duty on 20% product of product line.
*Regulatory- no regulatory duty is imposed on country produced product line.
*supplementary- duty imposed on phn calls are supplementary duty
*regulatory -no regulatory duty on such item accept imported goods
*supplementary - for imported luxurious goods only
*regulatory- for all imported goods
4. Export prohibition in rare cases: when exported products may harm health, eco system, national security, domestic supply then export may be demotivated. Again if the product will have a negative impact on public health economy, export must be prohibited. Motivate export after internal demand of goods and services are fill up.
#indirect tax measures:
1. Duty rates on merchandise import: concessionary duty rates on merchandise heavy industry.
2. VAT rebate: some export related Tax rebate
3. Exception of import tax/ income tax: income tax on exported goods should be 0. Exporting and importing tax on agricultural goods should be 0.
4. Cash grant/ cash back/ subsidy: cash back on some product export would be 50%.
5. Loan at concessional int rate: decreased int rate on export credit. Back to back LC facility.
#Sectoral policy development: sector wise different policy development.
1. Cash subsidy for frozen fish, shrimp, fruits, vegetable export.
2. Subsidization of industrial imports: tax rebate on import
3. Manufacturing activity dependent on RMG would be facilitated.
4. Export credit guarantee: ensuring payment guarantee for export.
5. Subsidy for using local febric.
#liberalization measures: 3 sectors
1. Financial: fund accessibility increase, fund increase for export import, at the same time ensuring fund back.
2. Telecommunication: liberal telecommunication, insuring support service for communication, simplifying mobile banking.
3. Transportation services: free accessibility, easy accessibility to main stream from distant places.
#private participation in shipping and port services: demutualization of ownership, ownership transfer apart from central owner, if we demutualize revenue can be confirmed.
#foreign mkt access through movement of workers: mobilize human resource, increase int trade.
