Key Highlights:
- Bangladesh has over 90 missions in different countries and regions, including 63 embassies or high commissions, 23 consular missions
- Since 1995, Bangladesh has actively participated as a member of the World Trade Organization (WTO) and has advocated for special and differential treatment, preferential market access, and technical assistance
- Initiating the Bangladesh–Africa Forum for Trade and Investment (BAFTI) in 2019, Bangladesh aims to explore trade and investment opportunities in Africa
- As per the Bangladesh Bank, the fiscal year 2023-24 witnessed a notable surge in the country’s exports, reaching $45.6 billion, marking a 12.5% upswing from the preceding year
Amidst the global dynamics, Bangladesh emerges prominently in the ongoing narrative of economic progress. Positioned in South Asia with a population of around 170 million, Bangladesh has experienced notable economic growth, boasting a 7.4% GDP. A key driver of this growth is its impressive trade performance.
As of 2024, Bangladesh has over 90 missions in different countries and regions, including 63 embassies or high commissions, 23 consular missions, and 4 permanent missions to the United Nations in New York, Geneva, Rome, and Nairobi. Recently, the government has decided to add over 30 diplomatic missions by 2024.
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Notably, 85% of the country’s exports, mainly garment items, are directed towards the European Union (EU) and the United States (US). As the world’s second-largest exporter of ready-made garments, Bangladesh also exports leather, jute, pharmaceuticals, and agricultural products.
However, the nation faces challenges and risks in its trade agreements and regional integration. The impending graduation from the LDC status by 2024 poses a threat, potentially leading to the loss of certain trade preferences and concessions. Consequently, Bangladesh must negotiate new trade arrangements, enhance competitiveness, and diversify to navigate heightened competition and reduced margins.
Diplomacy and Trade: An Inextricable Link
Since 1995, Bangladesh has actively participated as a member of the World Trade Organization (WTO) and has advocated for their special and differential treatment, preferential market access, and technical assistance. The country ratified the Trade Facilitation Agreement (TFA) in 2016, focusing on reducing trade costs and enhancing efficiency.
In addition to its WTO involvement, Bangladesh has entered into bilateral trade agreements with 29 countries and has become a member of regional trade arrangements such as the South Asian Free Trade Area (SAFTA), the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), and the Asia-Pacific Trade Agreement (APTA).
These agreements have facilitated market expansion, diversified export channels, and provided tariff concessions, leading to substantial growth in exports to India, for example, increasing by 182% from $563 million in 2011 to $1.59 billion in 2019, following India’s grant of duty-free and quota-free access under SAFTA in 2011.
Maintaining cooperative relations with major trading partners, including the EU, the US, China, India, and Japan, Bangladesh actively engages in forums like the Trade and Investment Cooperation Forum Agreement (TICFA). Further expanding its trade cooperation horizons, Bangladesh has joined the Organization of Islamic Cooperation (OIC) and the Developing-8 (D-8) to develop collaboration among Muslim-majority nations.
Initiating the Bangladesh–Africa Forum for Trade and Investment (BAFTI) in 2019, Bangladesh aims to explore trade and investment opportunities in Africa. Additionally, as a participant in China’s Belt and Road Initiative (BRI) Bangladesh actively contributes to enhancing connectivity and trade along the historic Silk Road. And with the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor, it aims to link the four countries through road, rail, water, and air routes, facilitating trade, investment, tourism, and cultural exchanges.
Moreover, reflecting a deep friendship and shared vision for a peaceful Asia, Japan, supported key projects like the Padma Bridge, Matarbari Power Plant, and Dhaka Metro Rail.
The role of Diplomatic Missions in Trade
Bangladesh’s diplomatic missions have played a pivotal role in broadening the nation’s trade and investment landscape, particularly in textiles, garments, leather, pharmaceuticals, agro-products, and information technology.
As per the Bangladesh Bank, the fiscal year 2023-24 witnessed a notable surge in the country’s exports, reaching $45.6 billion, marking a 12.5% upswing from the preceding year. Concurrently, imports also experienced a 10.2% growth, reaching $62.4 billion, resulting in a trade deficit of $16.8 billion. Primary export destinations for Bangladesh included the United States, Germany, the United Kingdom, France, and Spain. Meanwhile, key sources of imports were China, India, Singapore, Indonesia, and Japan.
Export Surge:
- Fiscal Year 2023-24: $45.6 billion
- Up by 12.5% from the previous year
Import Growth:
- Fiscal Year 2023-24: $62.4 billion
- Increased by 10.2%
Trade Deficit:
- $16.8 billion
Furthermore, foreign direct investment (FDI) in Bangladesh recorded a substantial increase of 15.3%, amounting to $4.2 billion in the fiscal year 2023-24, primarily propelled by the energy, telecommunications, and manufacturing sectors. Leading contributors to FDI were China, the United States, the United Kingdom, Singapore, and India.
The country’s outward FDI also experienced an 18.7% rise, totaling $1.1 billion, with a predominant focus on the services, construction, and mining sectors. Notable destinations for outward FDI included India, Nepal, Sri Lanka, Bhutan, and Myanmar.
Diplomacy in resolving Disputes
Bangladesh’s diplomatic missions have achieved notable success in resolving various trade disputes, securing favorable outcomes for the country. An illustrative instance is the resolution of a longstanding conflict between Bangladesh and India in 2020 concerning the sharing of the Teesta river water.
This disagreement had significant implications for the livelihoods of millions of farmers in both nations. Through diplomatic efforts, the 2 countries reached a comprehensive agreement, designating 42.5% of the river water to Bangladesh and 37.5% to India during the lean season. Additionally, they committed to collaborating on water management, irrigation, and flood control.
Another noteworthy accomplishment involves the dispute between Bangladesh and the European Union regarding the preferential market access of Bangladeshi products to the EU market. The EU considered suspending duty-free access under the Everything But Arms (EBA) scheme. Bangladesh’s mission in Brussels negotiated rigorously, successfully convincing the EU to maintain EBA status.
Conclusion
Trade, a fundamental aspect of human interaction, facilitates the exchange of goods, services, and ideas globally. Diplomacy plays a crucial role in this process, with diplomats serving as intermediaries to establish economic partnerships, negotiate agreements, resolve disputes, and advocate for national interests.
The symbiotic relationship between diplomacy and trade has propelled Bangladesh into key global forums, facilitating market expansion, developing bilateral ties, and resolving disputes effectively. Notably, the nation’s diplomatic missions have been instrumental in steering the course of trade, exemplified by successful resolutions and strategic collaborations.
