Abstract
The study examines the implications of Bangladesh's trade policies and the WTO
regulations on the trading status and comparative advantages of selected agricultural
commodities like rice, wheat, potato, lentil, sugarcane and jute. Price distortions and
agricultural incentives have been examined with the help of time series observation on
protection level for the period 1980-2005. The domestic-to-border price ratio of rice was
less than unity for most of the years and was significantly negative. It indicates that
domestic rice production was taxed and consumers were subsidized. The border price of
wheat at producer level measured at official exchange rate was mostly higher than the
domestic producer price, with average NRP of 7% for the period 1980/1981-2004/2005.
The effects of jute pricing and trade policies resulted in negative protection. Thus
domestic producer prices have always been below the world prices. Jute was negatively
protected. The NRP of sugar was estimated at 331% in 1985/86 which was the highest
and since then declined to 21% in 1994/95. These results implies that sugar was highly
protected in Bangladesh. Potato was also negatively protected both at export and import
parity prices. The border parity price of lentil at producer level with the official exchange
rate mostly remained higher than the domestic producer price, with average NRP of 2%
for the period. The estimates of Domestic Resource Cost (DRC) indicated that rice and
potato production was highly efficient both for import substitution and export promotion.
Bangladesh had comparative advantages in wheat, jute and lentil production for export
and sugar had no comparative advantage for import substitution. Production of rice,
wheat and sugarcane was encouraged and supported by policy incentives and that of jute,
potato and lentil was discouraged and not supported by policy incentives. The national
profitability value was encouraging for rice, wheat and potato cultivation for both import
substitution and export promotion. For most of the investigated years Social Benefit-Cost
(SBC) for both import substitution and export promotion was more than unity indicating
that the country could earn or save foreign exchange more than one times as compared to
its costs by investing in rice, wheat and potato production. The national profitability
value was also encouraging for jute and lentil production for export promotion and
import substitution, respectively. Bangladesh's trade balance situation is likely to change
enormously if the AoA negotiation results commitments as per the conservative
assumption. Bangladesh must negotiate for duty-free access of its agro-commodities to
the advanced developing country markets. Bangladesh can take full advantage of the
Special and Differential (S&D) treatment accorded to the developing and the least
developed countries by the Uruguay Round Agreement. This will enable Bangladesh to
protect her domestic production from cheaper foreign imports. For successful
implementation of trade liberalization policies, Bangladesh must plan accordingly and
take appropriate policies to materialize the likely gains in trade by increasing its trade
capacity. To exploit the export opportunities, Bangladesh will need to enhance its
supply-side capacity and pursue a broad based diversified agricultural production and
export strategу