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PRI chief rules out immediate effect

B'desh may face over 40pc tariff: UNCTAD

Trade war


Asjadul Kibria | June 26, 2018 00:00:00


Bangladeshi exporters may face an average tariff of over 40 per cent in case a full-scale trade war intensifies.

The United States (US) president, Donald Trump, has threatened a trade war and already levied increased tariffs on the products of certain countries.

The victimised countries have also started to retaliate.

Against the backdrop, the United Nations Conference on Trade and Development (UNCTAD) unveiled an estimation of possible tariff escalation to be faced by different countries.

In case of a full-scale trade war, it showed that the average tariffs could rise to as high as 30 per cent for American exporters, 35 per cent for the European Union (EU) and 40 per cent for Chinese exporters.

"So, even if the 'elephants' have sufficient economic weight to withstand a trade war, they would not benefit from one," said Dr Mukhisa Kituyi, secretary-general of UNCTAD, in his write-up titled 'The Costs of Trade War.'

UNCTAD estimation also showed that exporters of Bangladesh might face tariff as high as 43.40 per cent on an average in a full-fledged trade war situation.

The country is currently enjoying around 3.0 per cent tariff on average in the global market.

It also showed that exporters of India and Pakistan would face lower tariffs compare to Bangladesh, 31.70 per cent and 40 per cent respectively.

Such tariff for Sri Lanka would be higher than Bangladesh, or around 47 per cent.

Dr Zaidi Sattar, chairman of the Policy Research Institute of Bangladesh (PRI), partially differed with the UNCTAD analysis.

"Bangladesh will not be affected at the current stage of trade war," he told the FE on Monday.

"The current wave of tariff war is between the US and big countries," he said.

"The US is imposing high tariff on the imports of products it thinks should get protection. Other countries are also retaliating."

Dr Sattar noted that Bangladesh is already facing 15 per cent average tariff in the US market.

In the EU, the country is enjoying tariff-free market access under the Everything But Arms (EBA) benefit, he said.

Dr Sattar, a former World Bank economist, argued that the Least Developed Countries (LDCs) including Bangladesh will continue to enjoy the tariff-free access to different developed countries for the time being.

"These countries may face higher tariff only if there is an all-out trade war where every country will increase its tariff," he noted.

The UNCTAD analysis, however, noted that the increased tariffs are calculated under the assumption that all countries would engage in a trade war and set tariffs to their optimal mercantilist levels.

"This would include also nullifying any bilateral concessions and preferential conditions for specific categories of countries (e.g. least developed countries," it said in a note.

UNCTAD economist Dr Alessandro Nicita, along with Dr Peri da Silva at Kansas State University and Dr Marcelo Olarreaga of the University of Geneva, calculated the non-cooperative tariffs of different countries in case of full-scale trade war.

"A trade war would not hit all countries and industries equally," said Dr Nicita in a write-up appeared on the web portal of the UNCTAD.

"While the main economies may have sufficient economic weight to withstand significant retaliation, it does not mean that they will benefit from a trade war," he added.

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