Welcome to

our

Presentation1

Macro economics principles

(Econ 102)

Introduction

Name Student ID

2

Md. Al- Amin

Sara Sarkar

Asit Baran

S.M Ahsan

Habib

W121338

W121334

W111267

W121328

Our Topic

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India is Bangladesh’s most

important trading partner. How

can trade be stimulated between

the two countries?

What is International Trade?

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International trade is the exchange of capital, goods, and

services across international borders or territories. In most

countries, such trade represents a significant share of gross

domestic product (GDP).

Advantages of International

trade.

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Causes a flow of money into the economy which stimulates economic activity

Employment will increase

Long run aggregate supply will shift outwards

Aggregate demand will also shift outwards as investment is a component of aggregate demand

It may give domestic producers an incentive to become more efficient

The government of the country experiencing increasing levels of FDI(Foreign direct investment) will have a greater voice at international summits as their country will have more stakeholders in it

Disadvantages of International trade

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Inflation may increase slightly

Domestic firms may suffer if they are relatively

uncompetitive

If there is a lot of FDI(Foreign direct investment)

into one industry e.g. the automotive industry

then a country can become too dependent on it

and it may turn into a risk that is why countries

like the Czech Republic are "seeking to attract

high value-added services such as research and

development (e.g.) biotechnology)"

Why India is Bangladesh's most

important trading partner?

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Imports from India Export to India

$ 4776.93 million US

dollars which contribute

13.8 % of the total import

all over the year. And it is

the highest number of

imports after china

$ 512.93 million US

dollars. Which

contributes 2.3 % of the

total export all over the

year.

According to the report( Year 2011) of EU( European

Union) Bangladesh’s trade with India

Bilateral trade and exchange

rates

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In 2011 India’s officially recorded exports to

Bangladesh were about $1.7 billion but its imports

from Bangladesh were just $78 million. Since

1996/97 Indian exports to Bangladesh (in nominal

US dollars) have been growing at 9.1% annually,

just slightly above the general rate of growth of its

total merchandise exports (8.4%), but India’s

imports from Bangladesh over the same period

have grown on average at only 3% annually,

compared to average growth of its total imports of

9.2%. Consequently Bangladesh’s bilateral trade

deficit with India has been increasing rapidly, on

average at about 9.5 % annually.

Trade between India and

Bangladesh year to year

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Trade between India and

Bangladesh year to year

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India trade policy

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Non-tariff barriers. India’s licensing restrictions on imports of raw materials and manufactured intermediates were removed during its 1991/92 reforms, but imports of nearly all industrial consumer goods and agricultural products continued to be restricted. These restrictions were finally removed in April 2001.

Tariffs. As well as removing QRs from intermediates and capital goods, the 1991/92 reforms reduced tariffs and pre-announced a tariff reduction program.

Specific duties protecting the textile and garment industries

the government imposed specific duties on a large number of textile fabrics and garments, in order to protect domestic producers against low price import

India trade policy

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Anti-dumping:(AD) is one of the WTO-legitimate

measures that India introduced during the 1990s,

as a way of providing extra protection as its tariffs

came down and its import licensing system was

dismantled.

Export policies India operates a comprehensive

set of export policies. Three aspects of these

policies that are relevant for India’s trading

relationship with Bangladesh in the context of a

bilateral FTA or SAFTA.

Bangladesh Trade policy

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Non tariff barriers During the late 1980s and early 1990s,import licensing system was abolish. Of the continuingQR(Quantitative Restriction) the most important were theparastatal import monopoly over sugar and the ban ontextile fabric imports for use in the domestic market, whichprotected the textile industry.

Customs clearance at land border Customs posts:

The land border trade is subject to very seriousadministrative constraints in Bangladesh prospective .

• 38 out of the 42 land border Customs posts with Indiaseverely restrict the imported goods that can be cleared.

• only four land border posts can clear all imported goods.

Para-tariffs This slowing of tariff reduction occurredbecause continuing cuts in Customs duties were offset byincreases in the scope and levels of a variety of para-tariffswhich were imposed on top of Customs duties. By 2004/05about 40% of the unweighted average protection level wasdue to para-tariffs, and para-tariffs were being applied to21% of total tariff lines.

Bangladesh Trade policy

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Agriculture, livestock, fisheries and

processed food. Bangladesh’s trade policies in

these sectors warrant separate treatment

because, as in India, they differ in important ways

from its manufacturing trade policies, in addition

to which Indian agricultural products are generally

a large although fluctuating share of its total

exports to Bangladesh.

Export policies Bangladesh’s exports are

dominated by ready made garments, most of

which are exported to the US and the EU. Nearly

all garment exports are from firms operating in

export processing zones or as bonded

warehouses.

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Appendix

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Slide no 9:

http://horizonspeaks.wordpress.com/tag/ntb/