1

STATEMENT BY PAKISTAN ON BANGLADESH TRADE POLICY REVIEW

Thank you Madame Chair,

We join others in warmly welcoming H.E. Mr. Feroz Ahmed,Secretary Commerce of Bangladeshand his high-level team from Bangladesh. Mr. Feroz Ahmad’s statement gives a comprehensive overall over view of their trade and economic policies. The discussant Ambassador Don Stephenson was thorough in his analysis, describing all relevant pros and cons of the economic regime of Bangladesh. The Secretariat’s report is also of high standard and deserves our commendation.

As with almost all TPR’s there are both sides to the review, there is far more positive news than the negative, from Bangladeshsince their last trade policy review.

On the positive side, there is an average and sustained GDP growth of over 5% witheconomy becoming outward oriented with trade in goods and services rising from 31.1% of GDP to 39.4%. Increase of FDI by nine fold, tax reforms including reduction of applied MFN tariff from 22.2 to 15.5% and reduction of peak tariff from 37.5 to 25% speak of the correct direction of reforms. Other key areas are on-going customs and tax administration reforms, floating exchange rates and privatization of 65 state owned enterprises. Graduationof Bangladeshfrom low to medium rating in the UN Human Development Index bears testimony to this fact. These are just a few examples of many other positive achievements of prudent macroeconomic policies.

Looking at the other side of the coin,Bangladesh relies on indirect taxes for over 80% of its total tax revenue. As WTO Members are aware, indirect taxes have a more negative impact on the poor and thus affect reduction of poverty levels.

The other important concern, which has already been noted by Tony Miller, PR of Hong Kong and others is the low binding of only 3% of the industrial goods. Low binding is always tempting to reverse tariff reforms. This is clear from the Secretariat report that in this year’s budget alone, tariff rates of 40 items ateight digit tariff lines have been revised upwards.

Finally, there are a number of local content schemes. Many of us who have had such schemes have experienced that such schemes do not work and not only upset domestic consumers butalso hurt exports.

As far our bilateral trade and other relations, we have a number of historical commonalities. We have common membership of SAARC, OIC and D-8. Our trade volume although doubled during the last 5 years, yet remains limited to few product categories. We hope that as we make progress on the regional preferences, trade ought to grow. Under SAFTA regime, the tariffs would ultimately go down to 5% or less by 2015 between the two countries, thus giving good boost to bilateral trade.

Finally, I would like to commend Ambassador Taufiq Ali of Bangladeshfor his active and leadership role in the WTO negotiations. While Ambassador Stephenson noted his active participation in Integrated Framework, we feel thatas Chairman of a Negotiating Group - CTE (SS); and asspokesperson for the LDCs, his roleremained equally prominent. We would like to wish Bangladesh a very successful trade policy review.