Bangladesh complacent in competitive global market
Financial Express, Dhaka
Bangladesh complacent in competitive global market
By Abu Ahmed
30 October 2014
Bangladesh is, perhaps, the only country in the world which does not have any Free Trade Agreement with important trading countries. Countries around the world have dozens of free trade agreements among themselves just to do more trade and receive more investment. They signed these agreements not always to sideline the multinational Doha trade negotiations which started in 2001, but to complement the spirit of the Doha Round and speed up the negotiations.
Doha Round is taking much longer time than the previous Rounds like Tokyo Round and Uruguay Round to come to a closure. This Round will perhaps end up either in signing a statement or abandoned halfway by the countries of the world. The Doha Round led to massive globalisation in trade and investment. Most of the member countries of the World Trade Organisation (WTO) are already reaping benefits of the trade and investment negotiations that have so far been concluded under the Doha Round.
Many countries have now become disillusioned with the Doha Round and they are charting out their own ways to promote trade and investment through bilateral and multilateral trade negotiations. These efforts are resulting in dozens of free and preferential trade agreements among the countries of the world outside the Doha Round framework.
The world may one day become free for trade and investment but in the interim period some countries will be left out, specially the countries which could not sign any free trade agreement with others sans what they had already got under the hitherto negotiated Doha Round. Bangladesh is one such countries. Its neighbours, India, Sri Lanka and Pakistan, have more access to markets of other countries under bilateral free trade agreements.
Bangladesh has been enjoying GSP (generalised system of preferences) facilities in the European Union (EU) since even before the Doha Round started in 2001. Whatever trade facilities Bangladesh enjoys in the European market, that came not because Bangladesh tried for them. EU countries offered those to Bangladesh on their own as the same were offered to other LDCs.
The GSP facilities in the US market have already been suspended over labour and safety standards of Bangladesh garment factories. Bangladesh is paying more taxes than the European and African countries on its exports to the US market. But the real threat will come when the US will sign free trade and investment agreement, to be known as Trans-Pacific Partnership (TPP), which will include Asian countries like Malaysia, Vietnam and Brunei. These countries will have advantages over Bangladesh when sending exports to US market.
Countries around the world have already become disillusioned with the Doha Round and they are now trying to bypass the Doha Round for furthering the causes of trade and investment. To that end, they are inking many FTAs, bilaterally and multilaterally. Only a few least developed countries like Bangladesh failed to become members of any important trading blocs. Bangladesh also did not do well with its exports to SAARC (South Asian Association for Regional Cooperation) countries. Its export to the Indian market is already on the wane at a time when India is importing more and more goods from other countries.
The fanfare surrounding the South Asian Free Trade Area (SAFTA) of the SAARC countries is no longer there. SAFTA, to an extent, has turned into a non-functioning trade agreement.
Most exports of Bangladesh are going to two markets - European Union and the USA. Only recently Bangladesh’s export to Canada and Japan experienced a robust growth. But Bangladesh is facing differential treatment in the US market. It is feared that differential treatment is there to stay for a long term in view of US’s efforts to sign Transatlantic Trade and Investment Partnership (TTIP) with the European countries and Trans-Pacific Partnership Agreement (TPP) which will include a number of Asian emerging markets.
Bangladesh has never been serious in becoming a member of any functional trade bloc. India has already inked special trade agreement with the Association of Southeast Asian Nations (ASEAN). Bangladesh lags behind here too.
Bangladesh has the potential to export more, but lack of market access will stand as an obstacle in the coming days. It should not wait for the Doha Round to be concluded but should, instead, make its own efforts to promote its exports, as other countries are doing.
The writer is a Professor of Economics, University of Dhaka.
