Bangladesh has resumed direct trade with Pakistan after a more than 50-year hiatus. In the first government-to-government deal between the two countries in 50 years, Bangladesh’s Directorate General of Food signed a memorandum of understanding with the Trading Corporation of Pakistan (TCP) for rice imports. According to Reuters, the first shipment consists of 50,000 tons of rice and is set to leave from Port Qasim. The shipment will be delivered in two phases with the remaining 25,000 tons to be expected in early March.
Ziauddin Ahmed, a senior official at the food ministry in Dhaka, said that trade with Pakistan will allow a “new avenue of sourcing and competitive pricing” of rice. Before the agreement to resume direct trade, Bangladesh primarily imported the staple food from India, Thailand, Vietnam, and China. The Bangladesh government has been attempting to stabilize the market as the cost of rice has risen by 15-20% in recent months. As a response to the changes in the market, Bangladesh has since increased international imports and reduced import taxes to
maintain accessible costs for consumers.
Despite Bangladesh’s efforts to secure affordable rice, the deal with Pakistan is priced at $499 per ton, higher than that of the rice imported into Bangladesh from Vietnam at $474.25 per ton. The decision to pay a premium for Pakistani imports may be strategic with the goals of diversifying their suppliers, strengthening economic relations with Pakistan, and ensuring a stable supply chain.
Though there are economic benefits to both countries in this agreement, the significance of a Pakistan National Shipping Corporation vessel with government cargo docking at a Bangladeshi port for the first time in many years should not be overlooked. The strained relations since Bangladesh gained independence in 1971 have fueled the lack of economic cooperation between the two countries. Though there have been attempts to boost trade through proposed free trade agreements, they were unsuccessful. For decades, trade goods were routed through third parties, like the UAE. The cargo docking symbolizes a thaw in the relationship between the two countries.
The trade agreement comes at a time in which both countries face economic challenges. While Bangladesh is battling inflation and a lack of stability in food prices, Pakistan is struggling with declining exports. Given the economic strain both countries are battling with, this agreement is a shift toward pragmatic relations despite historical tensions.The recent economic challenges have likely contributed to their willingness to resume direct trade, yet the economic necessity may drive both countries toward increased cooperation and diplomacy.
