Report on the Consultations with Bangladesh

RESTRICTED WORLD TRADE WT/BOP/R/60 18 March 2002 ORGANIZATION (02-1372)

Committee on Balance-of-Payments Restrictions

REPORT ON THE CONSULTATIONS WITH BANGLADESH

1. The Committee resumed consultations with Bangladesh on 12 December 2001 and again on 27 February 2002 under the Chairmanship of Ambassador Hernando José Goméz (Colombia).

2. The Committee had before it the following documents:

WT/BOP/R/58 Report on the Consultations with Bangladesh (13 September 2001)

WT/BOP/R/57 Report on the Consultations with Bangladesh (23 January 2001)

WT/BOP/N/54 and Corr.1 Communication from Bangladesh (22 May 2001)

A. OPENING STATEMENTS

3. The statements by the representative of Bangladesh are attached as Annex I and II.

B. DISCUSSION IN THE COMMITTEE

4. In December, the representative of Bangladesh indicated that sugar would be added to the phase- out plan with a proposed date for elimination of restrictions as of 1 July 2005. One member suggested that further details on how the phase out for sugar would be operated would be an appropriate signal of a commitment to progressive liberalization; another as to whether the approved phase-out plan was on schedule. The representative of Bangladesh also indicated that his Government would be submitting information with respect to restricted products not included in the phase-out plan within a short period of time. Members agreed to resume consultations once this information had been circulated.

5. In February, the representative of Bangladesh informed the Committee that the restrictions due to be lifted on 1 January 2002 had indeed been removed. The Committee took note of the communication from Bangladesh "Notification under Section C of Article XVIII", circulated as G/C/7 on 16 January 2002. A Member noted that it would be consulting closely with Bangladesh with respect to this provision as recourse to it was quite untried. The Committee agreed to extend balance- of-payments justification for the remaining restrictions for an additional six months pending approval by Members of Bangladesh’s recourse to Article XVIII:C. WT/BOP/R/60 Page 2

ANNEX 1

Opening statement by the representative of Bangladesh

Meeting of 12 December 2001

1. I thank you for convening this meeting of the Committee on Balance-of-Payments Restrictions. Before I begin my statement, may I thank you and the Members attending today's meeting for their interest in Bangladesh. I also take this opportunity to thank the WTO Secretariat, particularly the officials of this Committee, for their contribution. The consultations we have had with the officials of the WTO have helped to clarify issues, and have facilitated our task. We greatly value WTO technical assistance. The Government of Bangladesh deeply appreciates the interest of this Committee in assisting us.

2. The BOPs Committee had endorsed the phase-out plan for restrictions on 11 products, submitted by Bangladesh at its meeting held on 15 December 2000. At that meeting, we had stated that Bangladesh would examine the position of the remaining 6 products, on which no phase-out plan had been submitted. It was our intention, at that stage, to ascertain whether any other justification would be required for those remaining products which till then had been covered by Section B of Article XVIII.

3. On 24 July 2001, we had considered this matter at the meeting of this Committee. At that stage, we had stated that Bangladesh was still evaluating the alternatives that were available under the framework of the WTO rules. In our statement, we had elaborated upon the considerations involved in each of the industries involved. I had also outlined the interim nature of the Government then in Bangladesh. The caretaker Government that was in charge was mainly occupied with the task of conducting the elections, which were held on 1 October 2001. On 10 October, a new Government was sworn in with a clear mandate from the voters.

4. It is now my pleasure to present to you our phase-out plan with regard to one category of products on which a decision was deferred at the last meeting. This category is HS Code No. 17.01, which we generally refer to as "sugar". All products under this broad category will be covered under the programme we have chalked out.

5. Our sugar industry uses, as its basic raw material, sugarcane produced in Bangladesh. There are 15 sugar mills in Bangladesh, employing around 20,000 regular workers and 9,000 seasonal workers. Furthermore, a large number of sugarcane growers are directly dependent on the sugar industry. All the sugar mills are in the state sector. As a consequence, the fate of the sugar industry is of great importance to the Government. Although the existing mills are generally unable to meet total domestic demand, the restrictions on the import of sugar have been maintained to ease the unfavourable balance-of-payments situation as well as to give an opportunity to this industry to become more competitive.

6. Despite the general restrictions on imports, a limited quantity of sugar is imported subject to the conditions laid down by the Government from time to time. Generally, this is in the category of specialized sugar for the pharmaceuticals industry, for the catering industry or for other food and allied industry. Furthermore, when the domestic production falls far below the local demand, the Bangladesh Sugar and Food Industries Corporation (a Government entity) is the principal importer. On specific occasions, imports have also been open to the private sector, particularly when the domestic prices are unusually high. WT/BOP/R/60 Page 3

7. The Government of Bangladesh is actively pursuing efforts at privatizing the sugar mills. Successful transfer of the sector into commercial hands is intended to increase the productivity of the sector and enable it to become internationally competitive. There are also plans for restructuring, balancing and modernization of some mills, should the private sector not come forward to take them over.

8. Within this framework, the Government of Bangladesh is of the view that it is now time to adopt a clear plan for phasing out the import restrictions. The existing restrictions will be phased out by 1 July 2005. It is hoped that within this period, the balance-of-payments situation of Bangladesh will also improve, allowing greater flexibility to the policymakers.

9. I do hope the WTO Members will find it possible to accept this phase-out plan drawn up by the Government of Bangladesh.

10. On the other products that were previously the subject of this Committee, I hereby confirm that we are seeking other justification for the restrictions on imports. It is the considered view of the authorities of Bangladesh that balance-of-payments considerations, though relevant, would not provide sufficient justification for the import restrictions to be maintained. We remain fully committed to the WTO rules, and it is our intention to conform fully to the provisions of the law for addressing our concerns.

11. I would like, once again, to thank you Mr. Chairman, the Members present, and the WTO Secretariat, for their patience and understanding. I am confident the Member countries will give sympathetic consideration to the concerns of Bangladesh, aimed at achieving fuller and more efficient use of resources in accordance with its economic development priorities. WT/BOP/R/60 Page 4

ANNEX 2

Opening statement by the representative of Bangladesh

Meeting of 27 February 2002

1. Thank you for convening the meeting of the Committee on Balance-of-Payments Restrictions. In some ways this Committee has emerged as one of the most important for Bangladesh. It is perhaps the only Committee where Bangladesh has special issues or subjects before it. Of course, as we participate more and more in the rule-based organization, our involvement will increase. It is probable that we will soon have another issue before the Committee on Trade in Goods.

2. I wish to give you an outline of some recent developments in regard to matters before this Committee since the decision reflected in document WT/BOP/N/54 dated 15 December 2000. In Anne III of that document, Bangladesh had provided a phase-out plan for 11 categories of products. The phase-out process was supposed to begin from 1 January 2002.

3. I am pleased to inform the Committee that there were two categories of products on which the phase-out was to have been effective from 1 January 2002. These products are single phase electric meters (in complete built-up condition) and the parts and components of electric meters and single phase electric meters in CKD or SKD condition. The Government of Bangladesh has withdrawn the import restrictions for those two categories of products.

4. The balance-of-payments position in Bangladesh is, at present, rather unfavourable. The economic slowdown experienced by many of our trading partners has affected us very deeply. In recent months, our exports have gone down sharply as a result of depressed demand in the importing countries. Our foreign exchange reserves are near an all-time low, and prudence requires that they be built up immediately.

5. Despite this unfavourable environment, the Government has decided to conform to the commitment made earlier to the BOPs Committee. In accordance with that commitment, the import restrictions on these products have been withdrawn.

6. There remains a few more products on which we have provided a schedule for lifting all import restrictions. As and when those restrictions are lifted, we will keep the Committee informed of developments.

7. I thank you and Members of the Committee for your understanding and support.

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