Bangladesh-Nepal
Bilateral Trade agreement
Representatives from Commerce Ministries of Bangladesh and Nepal met on May 11 and 12, 2016, at Kathmandu, Nepal, to deliberate on bilateral trade matters. The duo had already met twice in 2010 and 2012. In their previous conversation, both countries had expressed to offer duty-free market access to each other on several goods.
The talks include granting duty-free access to 108 Nepali and 56 Bangladeshi merchandise products. In FY2015, Bangladesh exported goods worth $25.05 million to Nepal, while its imports from the erstwhile Hindi kingdom was $11.50 million (as per Bangaldesh’s Commerce Ministry). Interestingly, FY2015 marked the first time in a decade since Nepal recorded a trade deficit with Bangladesh – due to a drop in exports of lentils to Bangladesh. As per the Bilateral Trade MoU, Bangladeshi exports like marine products, cement & construction materials, refrigerators, batteries, readymade garments, plastic, agri products like tobacco, etc., have been given a free-duty entry ticket into the Nepal market. On the other hand, the 108 products from Nepal that have reportedly been given duty-free access to the Bangladeshi market include cheese, honey, rose, rhododendron and its juice, lentils, cabbage, strawberry, rice items etc.
The talks covered reduction of Nepal’s customs rate by 5% points for goods where the duty structure is higher than 15% and by 3% points for duties below the 15% mark. Besides the duty-free access, the two parties promised to hold deliberations on phytosanitary measures, transit cargo, transportation, rail connectivity, visa simplification for businessmen, on arrival visa for Nepalese citizens in Bangladesh and overcoming technical trade barriers, etc.
Such treaties between LDCs lead to greater market access for exporters and increased consumer access to goods in these nations. These are wonderful foreign policy cases of ‘friends with (trade) benefits’!
Tanzania
Toothpick Import Ban
Going forward, Tanzanians are very likely to use local-made toothpicks after a hearty meal! Charles Mwijage, the Tanzanian minister for industries, trade and investment, pointed out that the country spends a huge amount of money in importing 800 containers of toothpicks every year, while it costs only $28,000 to purchase a machine to manufacture this essential item. He strongly emphasised on the country’s adequate resources, including leftover woods, which can fill the gap with ease. In his opinion, imports must be stopped for good. However, nothing is concrete as the bill will be passed only when all the MPs agree to the suggestion. The Parliament is also mulling over issues concerning the country’s juice processing industry. New investments and solutions for farmers are also being discussed, and by 2018, the country might probably see alterations in policies. Investments in pineapple farming have been already initiated, and in the process, optimistic investors may harvest a good return. Toothpick – what a product to even consider, when it’s actually overall exports that the ministry should be worried about. [In 2015, Tanzania’s exports almost touched the 2008-level!]
Iran-Malaysia
Preferential Trade Agreement
Malaysia and Iran exhibited trade-romance for once! Hoping to sign a preferential trade agreement with Iran, the Malaysia External Trade Development Corporation (MATRADE), led by its CEO, Dzulkifli Mahmud, arrived in Tehran, on 9th May. “The worth of trade between Iran and Malaysia was $532 million in 2015 and with the removal of sanctions against Iran, we are trying to increase this number to $1 billion,” said Dato Dzulkifli Mahmud. The delegation covered areas, such as offshore oil and gas equipment, control and maintenance systems, air pumps, spare parts, machinery, chemicals, medical equipment, construction materials, and technical products and services. Currently, Malaysia’s exports to Iran constitute only 0.25% of its total exports – that gives us an idea of the potential of growth in exports that Malaysia sees with warmer foreign policy ties with Iranian decision-makers. Apparently, both countries have maintained cordial relations with each other in recent years, and this will matter when it comes to Iran choosing between Malaysia and other markets to strengthen its foreign trade ties.
EU-Mercosur
Beef imports
EU’s critical deal with Mercosur bloc saw a new development, after EU pulled out market access offer for beef commodities exported from the Mercosur bloc (that comprises Brazil, Argentina Paraguay, Venezuela and Uruguay). The news follows an earlier development, where 13 EU states including Ireland, expressed discontentment that the €115 billion deal that is also expected to offer preferential tariff regime to Mercosur imports, would impact the domestic beef industry, considering Argentina and Brazil are the world’s largest beef exporters. A senior EU representative referred to the exclusion of beef by EU as a “sensitive product” after stating that EU’s initial formal offer included a tariff rate quota of 78,000 tonne. The GATT negotiations in the Uruguay Round of 1994 resulted in import concessions under reduced tariff, and adoption of tariff-rate quota (TRQ), which in simpler terms means that the Mercosur bloc could export 78,000 tonne over the 275,000 tonne that it currently exports at zero duty. European farmers fear they will be unable to compete with cheaper beef imports from South America. Ireland, which exports more than 90% of its beef output to Europe, is uniquely vulnerable to competition from the Mercosur bloc. Seems, cows in Mercusor are feeling a lot safer due to the new twist in the beefy tale.
UK–USA
Wheat Trade
The SBI LAMBADA, one of the most discussed and anticipated vessels in the world, arrived on American shores on May 22, 2016. It wasn’t carrying anything hush-hush. As per the North Carolina State Ports Authority, the vessel contained 61,000 MT of wheat. What’s so unusual about that and why the excitement? Well, this was the first time in the last two decades that UK had exported a large quantity of wheat outside the EU border.
USA is the second-largest exporter of wheat in the world (behind Canada). According to customs records, since 1992, UK has never shipped a cargo this large to the US. Concurring to the event, the trade pundits averred that UK’s historical feat of achieving the single largest consignment of a bumper wheat signifies two critical developments – the bumper cultivation season in UK and the depreciation of the pound.
These factors have largely sweetened large consignment-buying options of agri commodities from UK. In addition, wheat grain is being considered an alternative for livestock producers after corn. Since corn prices have rallied, UK wheat has attained a competitive position in global trade. Given two years of bumper harvests, prices of British wheat has fallen to their lowest in six years. Feed-wheat futures have dropped more than 6% in the past five months in London. Never in the past five-plus years had it dropped below 100 pounds a tonne. Looks like after cattle, even Americans will soon be found munching on British bread!
United kingdom
Trade deficit
Data from the UK’s Office for National Statistics (ONS) shocked observers and revealed weakness of the UK economy. The data highlighted the growing gap between imports and exports. In the first three months of 2016, the deficit figure of £13.3 billion eclipsed the 2015’s fourth quarter figures of £12.2 billion. The deficit is the largest since the first quarter of 2008, the year the financial crisis hit global markets. Some referred to the Q1, CY2016 result as “horrible first-quarter trade performance,” while few indicated that the results showed a slump in GDP. The UK economy’s quarterly growth rate fell to 0.4% in Q1, CY2016, from 0.6% in Q4, 2015. April figures showed that economic growth in UK was hit by a drop in manufacturing and construction output. The closely watched Purchasing Managers’ Index also indicated in the first week of May 2016, that UK GDP growth was ‘near stalling’.
There is also the problem of a lower than expected exports from UK. In the past year, the nation’s exports have been impacted by various factors including a lacklustre global demand and the Sterling’s growth against Euro. In comparison, while the country has been reeling under deficits,
Germany hit an all-time high in March.
Concerns about Brexit may have also caused concerns that could have led to the lazy economic movement in UK in the past quarter, but it’s unlikely that the EU referendum is the only reason for tepid performances on both output and export fronts.
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