Bangladesh’s export trade will be affected after implementation of the pact. He said some imports might also become costlier challenging for Bangladesh following the pact.
Published in The Financial Express on Wednesday, 7 October 2015.
TPP may trouble BD trade
Experts suggest entry into alternative bloc
Jasim Uddin Haroon
Bangladesh most likely stands to suffer from the effects of the US-led Trans-Pacific Partnership (TPP) trade deal, especially in terms of export earnings, according to economists.
Leading economists gave their views to the FE Tuesday, a day after Monday’s announcement on the pact from a meet in the US city of Atlanta.
They said Bangladesh has a sizable export market, worth around US$ 8.0 billion, in the bloc called Eurasia Group. And Vietnam, one of the key competitors of Bangladesh, is in the Eurasia bloc.
Trade ministers from 12 nations – the USA, Canada, Mexico, Japan, Australia, Vietnam, New Zealand, Malaysia, Singapore, Brunei, Peru and Chile–announced Monday the largest trade-liberalising pact that encompasses 40 per cent or US$30 trillion of the global economy.
At a press conference in Atlanta, trade ministers from the United States, Australia and Japan called the Trans-Pacific Partnership an “ambitious” and “challenging” negotiation that will cut red tape globally and “set the rules for 21st- century trade”.
Some see short-term impacts on the Bangladesh economy while some say it will affect adversely in the long run.
Economists, as such, say Bangladesh now needs to join any effective regional initiative as a safeguard strategy to help keep competitive in the global economy.
Dr Zahid Hussain, the lead economist at the Dhaka office of the World Bank, said: “Bangladesh’s two key markets – Canada and the USA-are in the Eurasia bloc. So there are many risks for the country.”
He noted that Vietnam, which exports the same products to Canada, the USA and Australia, will get duty benefit in other Eurasia bloc countries.
Vietnam is believed to be among the biggest winners, according to the Eurasia Group, with the agreement potentially boosting GDP by 11 per cent by 2025, with exports growing 28 per cent in the period.
“In my view Vietnam will get at least 15 per cent duty benefit, meaning that Bangladesh-made products will be costly as Bangladesh will have to pay tariff to enter the markets.”
But Mr Hussain said there is space for breathing for Bangladesh as both Democrats and Republicans are yet to reach consensus on it.
The US Congress will have to approve the TPP deal along with other 11 member-nations.
Dr Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh (PRI), said in the short run Bangladesh may face the challenge but in the long run the deal will affect it adversely.
He said Bangladesh is enjoying duty-free facility in Canada, Australia and Europe. “We’ll lose the opportunity after 4-5 years when we will be out from the least-developed country status.”
India and other neighbouring countries are also getting tied through different initiatives.
“How Bangladesh will survive when almost each country is getting tied for duty benefits,” Dr Mansur said.
Dr Khandker Golam Moazzem, additional director at the Centre for Policy Dialogue (CPD), said Bangladesh’s export trade will be affected after implementation of the pact. The pact might take at least two years to be implemented.
“To my mind, not only RMG will be affected but non-RMG exports of Bangladesh will also be affected,” Dr Moazzem said.
Export of frozen fish, pharmaceuticals and agricultural products might be hit hard.
He said some imports might also become costlier challenging for Bangladesh following the pact.
He pointed out that Malaysia, world’s second-biggest palm oil producer and one of the biggest growers of rubber, will get easy access to the advanced nations, which might make the products costly for the Bangladesh.
Dr Moazzem said Vietnam is much ahead of Bangladesh in terms of investment, compliance and the environment affairs. Vietnam is also much higher on the global competitive index so it might grab Bangladesh’s share there.
However, he said, the rules of origin (RoO) applied for the member-nations of the bloc are somewhat problematic for them.
According to the RoO, the members will have to collect raw materials and intermediate products from among themselves.