PART-A

INTRODUCTION:

What are we talking about when addressing the issue of the relationship between European Union and Bangladesh? In this case, we must focus attention on the European Union, strictly speaking, as a multi-state organization defining and implementing its collective economic, foreign and security policies. Or we must consider also, in addition to the European Union, the specific impact of some European states which are noted international powers on then own right, such as Great Britain, Germany and France. The focus of this paper will be clearly on the European Union. The ambiguity of the Union, its strength and its weakness, will necessary affect up to a point this study, and define its limitations. However, such an approach will help to perceive the Union as it stands today, in a decisive transition phase: a foremost power on the economic front, an active provider of development co-operation on the ground, a power concerned with governance and society, but not yet a decisive geopolitical force. This status explains partly the range of contradictory perceptions of Europe expressed in South Asia today. This, itself offers interesting clues about the present World order. The European Union includes today 15 countries, with a population of 380 million. Twelve of these countries have adopted a common currency, the Euro, on1.1.2002. In 2004, ten additional countries, mostly from Eastern

Europe, three of them former members of the Soviet Union, will join. The new entity will cover a little less than 4 millions km, with about 450 millions citizens. Its GDP (Euros 8.8 billions in 2001) will come closer to the US GDP (11.4 billions). The European Union is therefore one of the foremost powerhouses of the world economy, and the third populated political entity, after China and India. Is it however a full fledged major power? Looking at the EU-Bangladesh relationship will offer a fine opportunity to discover how, behind the deceptive low profile of the EU, afflicted by a weak political unity and by the limitation of its common foreign and security policy, a key global actor is at play.

Major Milestones in EU-Bangladesh Relationship Bangladesh-European Union (EU) relationship is entering into a new phase. It has evolved in major ways since the time when it was formally articulated through the Cooperation Agreement signed in 1976, and has come under renewed focus and scrutiny in the context of the proposed Cooperation Agreement which is going to be signed on 22 May, 2000. Box-1 traces some of the major milestones of this evolving relationship. Over these last two and half decades, as trading as well as development partner, EU countries both as a group through the European Commission (EC), and singly have come to occupy an increasingly important place in Bangladesh's external relations. EU member countries are major trading partners of Bangladesh, and EC and its member states together contribute a significant percentage of the total aid received by Bangladesh.

Milestones in Bangladesh - EU Relationships:

1973

Establishment of diplomatic relationship between Bangladesh and EC

1974

Negotiations held for the commercial co-operation Agreement between Bangladesh and EC

1976

Signing of the Commercial Co-operation Agreement

1982

Establishment of EC office at Dhaka under the South Asian Delegation in Delhi

1984

EC-Bangladesh Framework Agreement

1986

Signing up of the Textile Agreement between Bangladesh And EC

1988

The EC office in Bangladesh was promoted to full Delegation under the Vienna Convention

1990

The Head of EC Delegation presents his credentials to the President

1998

Signing of Agreement between GOB and EIB

Feb 1999

Initiation of the Co-operation Agreement between EC And Bangladesh

22 May 2000

Signing of the EU-Bangladesh Co-operation Agreement

For instance EU accounts for 45% and 10% of Bangladesh's export and import respectively. Bangladesh is the second largest aid recipient of EU in Asia (after India) and is at the top of the list of EC food aid recipients globally. Box-2 mentions some of the highlights of Bangladesh-EU development relationship.

OBJECTIVE:
We have made the assignment analyzing European Union and Bangladesh in order to present how political, economic and legal environment inform the roles and explanations of diplomatic, economic and political relationships between European Union and Bangladesh. In doing so, we have examined historical, social and political background of these two regions. It is important to consider the historical context of European Unions political system and especially of Bangladeshs political system, particularly after independence. The relation developed by the European Union with Bangladesh is multilayered. At the regional level, the EU has consistently affirmed an interest in strengthening links with Bangladesh, but without much expectation. An official overview affirms that "EU can help consolidate the ongoing integration process through its economic influence in the region, its own historical experience of dealing with diversity, and its interest in crisis prevention. Whatever the strategies followed, they express some key principles and values, which define the European way to address world issues. To quote from a EU's self definition: "The Union's economic development has been accompanied by substantial contributions to other countries and regions in term of development co- operation, humanitarian assistance and reconstruction aid. The European Community and its member states today provide more than half the funds for international development aid and more
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than 50% of world humanitarian aid. This aid is now supplemented by a political aspect: a contribution to international peacekeeping, using military force where appropriate, and the promotion of international co-operation, democracy and human rights"5. This assignment focuses on the regional blocs, international business, political, economic and legal environment of Bangladesh and European Union and on the current status of Bangladesh-EU trade relationship and identifying a number of issues which are expected to have important implications in terms of the development of Bangladesh European Union partnership in the coming days.

METHODOLOGY:
To fulfill the assignment we have to gather various types of information from various sources. Basically, we had to work on business relationship between Bangladesh and European Union. So, certainly we had to use secondary sources to have information regarding the assignment. First of all, our text book, International Business- A Managerial Perspective by Griffin & Pustay, has been really helpful to us to have basic knowledge about international business. Then we also had information regarding the political, economic and legal environment of Bangladesh and European Union from current affairs. We got help from the internet too about the regional blocks. The dailies also had been helpful from where we had huge information regarding present condition of business relationship between Bangladesh and European Union.

LIMITATIONS:
To successfully complete the assignment, though we do not know whether it is accomplished or not, we had some limitations. First of all, we would like to say that as we are not skilled as researchers there must be various types of mistakes in the assignment. We think that in some particular cases we can not be able to provide appropriate information. As we have made the assignment through using electronic equipments-such as-computer, printer, electricity is a must. So, due to improper supply of electricity, we have faced so many difficulties. We also had to complete the assignment within limited time and we think that this type of task is really time consuming and so, we may not have done the task appropriately.

PART-B:
THEORETICAL FRAMEWORK: Regional Bloc:
A regional bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where regional barriers to trade, such as tariffs and non-tariff barriers are reduced or eliminated among the participating states. One of the first economic regional blocs was the German Customs Union (Zollverein) initiated in 1834, formed on the basis of the German Confederation and subsequently German Empire from 1871. Surges of regional bloc formation were seen in the 1960s and 1970s, as well as in the 1990s after the collapse of Communism. By 1997, more than 50% of all world commerce was conducted under the auspices of regional blocs. Economist Jeffrey J. Scott of the Peterson Institute for International Economics notes that members of successful trade blocs usually share four common traits: similar levels of per capita GNP, geographic proximity, similar or compatible trading regimes, and political commitment to regional organization. Advocates of worldwide free trade are generally opposed to regional blocs, which, they argue, encourage regional as opposed to global free trade. Scholars and economists continue to debate whether regional blocs are

leading to a more fragmented world economy or encouraging the extension of the existing global multilateral trading system. Regional blocs can be stand-alone agreements between several states-such as the North American Free Trade Agreement (NAFTA) or part of a regional organization-such as the European Union. Depending on the level of economic integration, regional blocs can fall into different categories, such as: preferential trading areas, free trade areas, customs unions, common markets and economic and monetary unions.

Active Regional Blocs

Nominal GDP (US Dollars)
Regional Block AU Arab League ASEAN CAIS CARICOM CCASG CEFTA CIS EU EFTA GUAM NAFTA PIF SAARC SCO UNASUR WORLD Population 932,455,487 331,109,238 572,500,231 50,778,800 16,525,876 36,154,528 27,968,711 277,863,109 494,724,415 12,518,316 62,861,573 449,227,672 33,924,883 1,567,187,373 1,510,746,315 383,200,768 6,670,469,438
GDP 2006 GDP 2007 growth per capita

Members 531 18+42 10+13 8 15+54 6 8 10+25 27+36 4 4 3+17 15+28 8 6 12 210

1,063,544,479,886 1,298,460,306,133 1,079,135,945,502 141,217,305,037 60,277,532,067 724,460,151,595 110,263,802,023 1,278,421,583,732 14,573,314,304,001 743,965,097,722 139,888,538,550 15,337,094,304,218 918,205,285,031 1,162,684,650,544 4,066,714,194,780 1,930,238,243,858 48,786,093,133,217

1,227,101,993,460 1,476,119,372,181 1,285,693,351,132 159,746,036,421 66,894,485,968 802,641,302,477 135,404,501,031 1,668,683,151,661 16,782,876,708,653 833,692,965,348 186,996,463,870 16,189,097,801,318 1,102,292,450,172 1,428,392,756,312 5,046,655,129,110 2,349,528,121,496 54,635,982,249,266

15.38% 1,316 13.68% 4,458 19.14% 13.12% 10.98% 10.79% 22.80% 30.53% 15.16% 12.06% 33.68% 5.56% 20.05% 22.85% 24.10% 21.72% 11.99% 2,246 3,146 4,048 22,200 4,841 6,005 33,924 66,598 2,975 36,038 32,492 911 3,341 6,131 8,191

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International Business:
International business consists of business transactions between parties from more than one country. Examples include buying materials in one country and shipping them to another for processing or assembly, shipping finished products from one country to another for retail sale, building a plan in a foreign country to capitalize on lower labor costs, or borrowing money from a bank in one country to finance operations in another. How does international business differ from domestic business? Simply put, domestic business involves transactions occurring within the boundaries of a single country, while international business transactions cross national boundaries. International business can differ from domestic business for a number of other reasons, including the following: # The countries involved may use different currencies, forcing at least one party to convert its currency to another. # The legal systems of the countries may differ, forcing one or more parties to adjust their practices to comply with local law. # The cultures of the countries may differ, forcing each party to adjust its behavior to meet the expectations pf the other. # The availability of resources differs by country. One country may be rich in natural resources poor in skilled labor, while another may enjoy a productive, well-trained workforce but lack natural resources. Thus, the

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way the products are produced and the types of products that are produced vary among countries. However, in most cases, the basic skills and knowledge need to be successful are conceptually similar whether one is conducting business domestically or internationally.

Political environment in Bangladesh:

Currently, the political environment is not so good in Bangladesh. As a democratic country, obviously the political environment of Bangladesh should be dressed of democratic form. But, in most of the cases political environment of Bangladesh would become so pollute that we cannot imagine that what type of political system has been following by our political parties. Without political unity, amity, true exercise of democracy; the political environment of Bangladesh can never be healthy. The greatest leader Abraham Lincoln stated that, democracy is of the people, by the people, for the people. To us, all of Bangladeshi politician must have to follow the statement so that the real political environment shall be pervaded in Bangladesh.

Economic environment in Bangladesh:

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The present status or condition of economic environment in Bangladesh is not very well. Shortage of capital in Banks, pressure on foreign exchange reserves, pervasive downfall in share market, anomalies in Banks and other financial institutions etc. are the clear indication of the worse situation in our financial system. Bangladeshs investment policy is friendly to foreign investment but implementation of these policies is a continuing problem. As a result, actual foreign investment has legged behind its potential. Infrastructure such as electric power, telecommunications, water and road transport is poor, even by regional standards. The countrys legal system is outdated and undermanned leading to long delays in resolving cases. Many government officials view their role more as controlling commercial activity rather than stimulating it. Political instability marked by frequent hartals and strikes is a continuous bar against flourishment of business and commerce in the country. Low and order situation in the country also is not well and friendly to business and commerce.

Legal environment in Bangladesh:

Bangladesh is a signatory of the GATT Uruguay Round and World Trade Organization (WTO) agreements, including the Agreement on TradeRelated Aspects of Intellectual Property Rights (TRIPS), and is obligated to bring its laws and enforcement efforts into TRIPS compliance by January 1, 2000. Bangladesh has also been a member of the World Intellectual Property Organization (WIPO) in Geneva since 1985.

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Since 1989, the county has moved from extreme over regulation to a slight decrease in governmental obstruction. Many changes are not politically possible to implement, despite ministry commitment, due to influential ($) groups. For instance, the chambers of commerce includes manufacturers in protected industries. They want privatization, but they also want protectionism and subsidies. Policy and regulation is often not clear, consistent, or public. Businesses and political parties have interests in the system which are used as excuses for lack of transparency. Its hard for businesses to get action from civil servants, even with political support. Servants are underpaid, yet they think of themselves as having a monopoly on economic acumen. They know their actions are now being scrutinized, but still ask for bribes. The international community says public administration reforms are central to overall economy reform. Bangladesh is notorious for corruption. A 1996 report by Transparency International listed Bangladesh as the fourth most corrupt nation in the world! Petty corruption, such as paying fees for government services (Telephone lines, customs clearance) are the biggest complaints. Insider trading is commonly sited too. There is an anti corruption bureau, but "it is not always seen as being free from political presses when determining whom corruption cases should be bought". There is a weak legal system to enforce contracts. 10 years can pass before a case is resolved. Corruption (Again!) is a serious problem, especially in lower courts. Since the government controls the judiciary system, there is no checks and balances. Its almost like a monarchy. Legislation in this area is 'pending.' Never the less, the Supreme Court has retained a reputation of fairness and competence. So, if you want you case to be fair, you must take it to the appellate level.

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Although Bangladesh is a party to the International Convention for the Settlement of Disputes (ICSID, they have not yet acceded to the U.N. convention of enforcement. The Bengali judicial system is weak to enforce its own system, so foreign judgments aren't expected to be enforced any stronger.

Political and Economic environment in the European Union:

Basic knowledge of the European Union. Creation and legal basis of the EU, institutions and decision making process. EUs policy areas: budget of the EU, domestic market and competition policy, trade policy, economic and monetary union, agricultural and regional policy, structural funds, employment and social policy, environmental policy, common foreign and security policy, police cooperation and cooperation in criminal matters. Estonian officials role and opportunities in the work of EU institutions, policy areas and decision making process. In the case of outcome, participant acquires a thorough overview of the principles of how the EU functions, its institutional organization, policy areas, EU enlargement and reforms as well as Estonias integration with the Union. Carried out by Department of Government.

Legal environment in the European Union:

European Union Law is the unique legal system which operates alongside

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the laws of Member States of the European Union (EU). EU law has direct effect within the legal systems of its Member States, and overrides national law in many areas, especially in terms of economic and social policy. The EU has some of the world's highest environmental standards, developed over decades. Its main priorities are: protecting endangered species and habitats and using natural resources more efficiently - goals that also help the economy by fostering innovation and enterprise. The objective of the European Commission's Directorate-General for the Environment is to protect, preserve and improve the environment for present and future generations. The objective of DG Environment is to protect, preserve and improve the environment for present and future generations. To achieve this it proposes policies that ensure a high level of environmental protection in the European Union and that preserve the quality of life of EU citizens.

PART-C
FINDINGS:
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Trade Relationship between European Union and Bangladesh:

Relations between the European Union and Bangladesh date back to 1973. The EU-Bangladesh Commercial Co-operation Agreement, signed in 1976 was replaced by a third generation co-operation agreement in March 2001. The agreement paved the way for cooperation on a broad range of areas including political dialogue, further developing the relationship. This Country Strategy covers the period 2007 to 2013. It is drafted against the backdrop of the following key challenges for Bangladesh: # A continued struggle in addressing the structural problems of poverty and to achieve the MDGs by the target date of 2015. # Good governance problems that affect the efficient and effective delivery of basic public services to the poor. # Potential economic and social short falls following the ending of the WTO Textiles quota system and the need to diversify the industrial base and to improve the enabling environment for business. The EUs strategy is grounded in the GoBs own response strategy to these challenges contained in the Poverty Reduction Strategy Paper. At the same time, our strategy seeks to strike a balance between social and economic development commitments. While we seek to support economic growth and
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contribute towards the countrys integration in the world market, it is increasingly patent that growth alone is not enough this is a clear message, for example, from the 2005 UN Human Development Report and we must also deal directly with the issues of exclusion and poverty with a clear focus on achieving the MDGs. In order to increase the impact of our measures and to promote greater efficiency in the use of resources, the EU will concentrate the scope of its development commitments on three focal areas and two nonfocal areas: Focal areas:

Human and social development Good governance and human rights Economic and trade development

Non-focal areas:

Environment and disaster management Food Security and nutrition

The EU strategy must be seen as part of a broad donor landscape where donors will contribute with diverse expertise and resources to a balanced aid package to Bangladesh. The EUs commitment to donor coordination in Bangladesh is reinforced by the March 2005 Paris Harmonization Conference and the decision by the majority of the donor community in Bangladesh to develop their programs in response to the Governments PRSP. The EUs strategy has therefore been designed and will be implemented in cooperation with the other main donors and in broad conformity with the Bangladesh Harmonization Action Plan which the

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Government and Donors are developing in the context of the PRSP.

PART-D
CONCLUSION:

The EU has various taxes or embargos against everyone else so it probably a

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relationship of mild dislike. You would be better off looking at the diplomatic relationship between the individual countries of the EU and Bangladesh. The EUs support of Bangladesh has been both financial and technical, as evidenced by projects such as the PERP (Preparation of Electoral Roll with Photographs) and the large delegation of election observers. The European Unions role in the process that yielded 29 December 2008 cannot be underestimated. By expanding the EUs activities to establish Bangladesh as a modern, sustainable democracy, Bangladesh can serve as a model for democratization in other Muslim countries struggling with the process. This requires embedding democratic principles and values across every level of society, ensuring peoples rights and participation, and establishing efficient, accountable institutions. A two-pronged approach addressing both state and non-state entities is necessary. In particular, the EUs comparative advantage in institutional capacity building can benefit the reform process in Bangladeshs institutions. Since the beginning of the 1990s, Bangladesh's economy has developed as a result of significant shifts in trade, fiscal, industrial, agricultural and financial policies. The economy has grown at an average rate of 5-6% over the last decade, supported by the service sector, export-oriented manufacturing, inward remittances and foreign direct investment (FDI). Total FDI stock in Bangladesh at end-2008 was reported by the Bangladesh Bank to be $4.8 billion, primarily in the gas and petroleum sector ($1.2 billion), telecommunications ($1.0 billion), textiles ($0.9 billion), and
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banking ($0.7 billion). In recent years the telecommunications sector has seen the strongest foreign investments. Close to one-third of this FDI is from EU companies, principally from the United Kingdom (25%) and the Netherlands (5%). We can mention the importance of shrimp exports as an example in the economy of Bangladesh. Table I presents the values of total, primary products, and shrimp exports over the period of 1990 to 2007 fiscal years. The value of shrimp exports shows increasing trends over the period under consideration except in 1998 and 1999. During these two years absolute exports were below that of the immediate preceding and succeeding years. It increased from about US$ 127 million in 1990 to about US$ 279 million in 1997 and from about US$ 322 million in 2000 to about US$ 457 million in 2007. In contrast, during 1998 and 1999 exports of shrimp declined to about US$ 250 million. It may be noted that the trend in fish exports followed closely that of shrimp exports. Between 1990 and 1997, it increased from US$ 139 million to US$ 332 million and showed a depressing trend during 1998 and 1999 before bouncing back with a vengeance since 2000. Even though exports of primary products show the same cyclical pattern, total exports did not show any discernible sign of the impact of the EU import ban on shrimp. The value of shrimp exports has been expressed as per cent share of (i) total fish exports, (ii) exports of primary products, and (iii) total exports. The share of shrimp exports in total exports was around 6-7 per cent in the early 1990s; the trend continued till the EU ban. After the ban its share declined to 4.6 per cent and showed a secular declining trend since then. It may be noted

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that exports of readymade garments (RMGs) have been increased dramatically since the mid-1980s. Bangladesh has pursued a policy of trade liberalization since the early 1990s. Export diversification and import liberalization received increased attention. As a result, a considerable reduction in tariff and non-tariff barriers was achieved. Although in recent years exports in key areas such as garments, knitwear, shrimp, leather and household textiles goods have performed well, they have not kept up with the economy's demand for imports of essential commodities such as fuel and food grains, resulting in a growing trade deficit and pressure on the foreign exchange reserve. There have also been some difficulties in meeting quality and standards required for access to the EU market, especially in the frozen food sector. As a Least Developed Country (LDC), Bangladesh enjoys quota- and dutyfree access to the EU under the 1986 Textile Agreement and General System of Preferences (GSP) respectively. The "Everything but Arms" initiative of 2001 assured the continuation of GSP for an indefinite period for all LDCs. However, Bangladesh's trade capacity presently relies on a very limited number of export products. There is, therefore, a need for a profound diversification of the country's export range. The EU is the biggest export destination of Bangladeshi products, accounting for 56% of the country's total exports in 2007. The main items Bangladesh exports to the EU are readymade garments (90%), frozen food (6%), leather, jute and tea. Bangladesh's main imports from the EU consist of machinery and
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mechanical appliances (55%) and chemical products (14%). In 2008 the EU's exports to Bangladesh amounted to 1.1 billion, compared with 5.5 billion.

PART-E
REFERENCES:

# Text-International Business- A Managerial Perspective by Griffin & Pustay. # Current Affairs of November, 2011.

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# Current Affairs of May, 2011. # www.janaojana.com (Accessed on the 25th March, 2012) # www.american.edu (Accessed on the 26th March, 2012) # www.tlu.ee/keelekeskus (Accessed on the 28th March, 2012) # www. en.wikipedia.org/wiki (Accessed on the 28th March, 2012) # www. docs.google.com (Accessed on the 31st March, 2012) # www. europa.eu/index_en.htm (Accessed on the 4th April, 2012) # www. en.wikipedia.org/wiki/South_Asian_Association (Accessed on the 5th April, 2012)

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