CEPA is the new-age tool for advancing bilateral relations
Bangladesh Prime Minister Sheikh Hasina was on a four-day visit to New Delhi, this week, along with several senior ministers of her government. India and Bangladesh are now in the ‘Shonali Adhyay’ (literally translated golden phase) of their bilateral relationship, and this visit’s outcome will decide the onward journey.
India and Bangladesh bilateral relationship is of significant political interest in Dhaka, where Sheikh Hasina will be looking at re-election for the fourth time. Sheikh Hasina personally has an affinity for India, as she had sought refuge in Delhi after her father Sheikh Mujibur Rehman was assassinated in a military coup. It is here that she found the late president of India Pranab Mukherjee take her under his wings and act as her guardian.
The sense of bonhomie continues with Sheikh Hasina maturing into an astute leader in the past nearly two decades of her being at the top leadership position in Bangladesh. Her continued leadership in Bangladesh would be in best interests for India due to her efforts to stall extremist Islamist militancy and her government’s denial to provide shelter to anti-India elements.
It assumes more significance given the geopolitical headwinds and the evolving threats from China emerging in the region. Last week the Chinese foreign minister in Dhaka had placed itself as the key strategic partner for Bangladesh.
Bangladesh has recently sought a $4.5 billion loan from the international monetary fund (IMF) to manage its economy. China has a huge say in the way the IMF approves these loans. Unofficially, IMF encourages its key members such as China to settle terms of the loan, bilaterally with countries concerned before providing an approval. This can potentially limit Bangladesh’s hand, while dealing with China, even though they have maintained that they will be cautious while taking loans from China. It is in India’s interests to quickly move in and deepen the India-Bangladesh relationship further. In March this year, speaking at the India-Bangladesh stakeholder meet, Commerce minister Piyush Goyal said, “India is looking to advance the Comprehensive Economic Partnership Agreement (CEPA) with Bangladesh”.
CEPA is the new age tool for advancing bilateral relationships between two countries. As opposed to a free trade agreement, which generally has been more concentrated on trade in goods and has to clear a threshold defined by WTO, a CEPA is a more comprehensive economic framework. A CEPA has mechanisms to address issues related to trade in services, mutual recognition of standards in each other’s markets, government procurement and connectivity related challenges.India has recently signed a CEPA with the UAE, while earlier it has entered into similar agreements with Japan and South Korea. One of the top exports from Bangladesh is textile and apparels, mainly shipped to Western nations. However, due to the geographic proximity and historic reasons most of Bangladesh’s raw materials are shipped from India. Proposed road and railway routes from India’s Northeast, passing through Bangladesh, can provide the much needed alternative connectivity for NE with Indian mainland.
The second pillar of the CEPA is joint production of defence equipment. Even though India has extended a $500 million line of credit towards this, it hasn’t really taken off. The third aspect of the relationship is to diversify the mutual trade relationship and look at potential investments in areas such as edtech, digital health, services, electronics and green energy. It is understood Bangladesh has already given a green signal to the CEPA text, the ball is in India’s court to play now.
(The author is a foreign affairs commentator)
