On March 22 Bhutan and Bangladesh inked a transit deal in Thimpu, the capital of Bhutan, to ease bilateral trade between the two countries. It is good news for many reasons. Bhutan was the first country in the world that recognized Bangladesh as an independent and sovereign country following the Liberation War in 1971.

Bhutan is one-third the size of Bangladesh with a population of less than one million. Bangladesh has been assisting Bhutan in many ways. One of the sectors where Bangladesh helps Bhutan immensely is medical education where every year many students from Bhutan receive their medical education in Bangladesh. Even Bhutan’s incumbent Prime Minister, Dr Lotay Tshering, received his medical degree from Bangladesh.

Bhutan and Bangladesh have had diplomatic ties since 1973 but since then the two countries have not been able to draw benefit out of their relationship as they have no direct border. A 30-km strip of Indian territory separates the two countries making it difficult for them to make the best use of their relationship. Being a landlocked country Bhutan’s main source of export is its hydropower. With abundant Himalayan water resources, Bhutan has an energy surplus. It has also large untapped hydropower potential.

This transit agreement will pave the way for energy imports from Bhutan. A Free Trade Agreement (FTA) was signed between the two countries in 2009. After last month's agreement, the FTA will gain momentum. The agreement will enable Bhutan to use Bangladesh's air, railways, river ports, land and sea ports since Bhutan is a landlocked country and has no river or sea ports of its own.

Maximising bilateral opportunities

Some 100 Bangladeshi goods like garment items, fruit juices, particle boards, potatoes, cement, biscuits, cosmetics, sugar, jute or coconut-fibre carpets, footwear, corrugated iron sheets, iron rods, cables and dried fish are enjoying preferential duty benefits on export to Bhutan under the Preferential Trade Agreement (PTA). Under the PTA, Bhutanese goods like milk, natural honey, cement clinker, soap, mineral water, portland cement, ferrosilicon, wheat bran, boulder stone, dolomite, gypsum, calcium carbonate, apples, pears, cabbage, cauliflowers, orange, potato, dried chili and cardamom are enjoying the same benefit.

Now both countries can maximize the uses of those goods as hopefully prices of those items will come down significantly after the agreement comes into effect. Speaking on the occasion, Bangladesh Commerce Minister Tipu Munshi termed it an epoch-making agreement that would simplify trade and commerce between the two countries and take it to new heights. She also stressed the need for enhancing relations in the agricultural sector, especially increasing the trade of mushrooms and other agro-products.

With Bangladesh looking to take the next logical step in its economic journey, it has never been more important for it to build better relationships with other nations, particularly those within South Asia.  Indeed, among criticisms directed at the South Asian region has been the relatively poor connectivity that holds back regional prosperity, and it is only through such bilateral understandings and agreements on the part of all the nations that progress will be made.

For Bangladesh, these are the sort of conversations and agreements it must continue to pursue and ensure that they are implemented; as has been said repeatedly, with graduation from a least-developed country to becoming a middle-income economy, it will lose many privileges afforded to LDCs.

(The author is an educator-researcher who did her master's in International Relations from the University of Dhaka, Bangladesh. Views are personal. She can be reached at jubedachowdhury103@gmail.com)