Country\\\'s trade competitiveness under threat

Bangladesh's economy may find it difficult to sustain its global competitiveness when two oncoming blocs styled TTIP and TPP come into shape involving both global trade giants and some emerging economies, analysts said.
Economists and trade leaders fear that the Trans Atlantic Trade and Investment Partnership (TTIP) and the Trans Pacific Partnership (TPP) could be the biggest trade deals in history.
The rules of the game in trading arena are under negotiation among the giants in the Atlantic and Pacific rims.
The United States and the European Union are set to sign on the TTIP while 12 countries -- the USA, Canada, Mexico, Vietnam, Malaysia, Chili, Peru, Australia, New Zealand, Singapore, Brunei and Japan -- will enter into the TPP deal.
Together, the two mega trade and investment agreements, known as partnerships, would bring together countries that make up some 60 per cent of the global economy.
The European Union is the largest export market of Bangladesh while the USA stands next, but as a single export destination the latter is in the top position.
Once the two agreements should be in place, the trade partners will enjoy duty-free facility among themselves, thereby hitting other countries, including Bangladesh.
"The Atlantic and Pacific partnerships, once signed, are likely to be elite clubs involving free flow of goods and capital but with stringent compliance rules on standards relating to SPS (Sanitary and Phytosanitary) and TBT (technical barriers to trade), rules that low-income countries will have difficulty meeting without special and differential treatment, something that these partnerships would be reluctant to grant," said Dr Zaidi Sattar, Chairman of the Policy Research Institute (PRI).
Geographically, Bangladesh is not eligible for the first two partnerships.
Another similar partnership that is well advanced is the Regional Comprehensive Economic Partnership (RCEP), the grouping of ASEAN+10 (i.e. ASEAN plus countries that have signed FTAs with it, including China and India).
Given its current posture in trade policy as well as LDC status, it would be tough for Bangladesh to get an FTA signed with the ASEAN, he said.
The USA, belonging to both the rims, is reportedly driving the initiative to bring the negotiations to closure.
China is conspicuous by its absence from both the blocs though it is a major Pacific-rim country.
Dr Sattar pointed out several reasons for the emergence of these partnerships beyond the multilateral trade arrangement preached by the World Trade Organisation (WTO), disenchantment with the WTO decision-making process being one of them.
"WTO decisions are based on consensus among all members, and negotiations close on the principle that nothing is agreed until everything is agreed," he said.
As a result, he noted, WTO Rounds of trade talks are taking longer to come to closure. The Tokyo Round (1964-67) took four years, Uruguay Round (1986-94) nine, and the Doha Round which began in 2001 was yet to come to closure.  "So, Bangladesh appears to be left out of the three emerging mega trade and investment partnerships, with its membership in WTO being its only chance of taking advantage of global trade and investment opportunities," he said.
Just as China will lose out when TTIP and TPP are functional, Bangladesh will lose by being left out of the free trade and investment arrangements that will be exclusive to members of the three giant partnerships, said the economic policy analyst.
"However, properly positioning itself for a possible FTA deal with ASEAN+ sometime in the future would remain an option to pursue," Dr Sattar suggested.
Businesses are afraid that TTIP and TPP may affect the country's export market to the USA and the EU.
Bangladesh is sitting almost idle sans tapping the largest market that would be captured by other international competitors, including Vietnam and Malaysia, they said.
Currently, Bangladesh is enjoying MFN tariff on the US market while GSP facility on the EU market.
Manzur Ahmed, adviser of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), expressed his grave concern over what he saw as reluctance of the government to address the issue.
"Bangladesh should take initiative to sustain its competitiveness on the largest export market in the USA, Canada and the EU. Other global competitors would be in favourable position on that market after the signing of the TIPP and TPP," he said.
Mr Manzur suggested the government focus on the largest market instead of wasting time in signing bilateral agreements with the countries holding poor trade scope.
He observed the TPP and TTIP rules were going beyond the WTO in terms of labour standards and quality, which will create artificial trade barriers for Bangladesh.
He said the neighbouring country, India, is also enjoying free trade in the ASEAN and its export to those countries is on the rise.
"Our global competitors in apparel export would be either in TTIP-TPP or aligned with other agreements while we are sitting idle," he said.
Once the agreements signed between the global giants, the export-market competitors of Bangladesh would enjoy duty-free facility in those markets under FTA.
"We will lose competitiveness as cost of doing business is low in those countries due to their geographical locations and with the elimination of tariffs," he said.
In a recent study on "Implications of TTIP and TPP on Chinese economy" Professor Masudur Rahman and Qiner Jiang of Zhejiang A&F University, China, investigated the potential economic impacts of tariff reduction under TPP and TTIP on various macro and trade variables of the Chinese economy.
This study used Global Trade Analysis Project (GTAP) model of 18 aggregated regions and 10 aggregated tradable commodities to understand the potential impact of TTIP and TPP on the Chinese economy.
The analysis evinced that under complete integration in terms of tariff elimination under TTIP and TPP, China's real GDP could decrease by 0.34 per cent whilst welfare loss could be to the tune of US$3.2 billion.  Chinese exports may fall about 0.12 percent as well.
In Bangladesh perspective, the study reported that the TPP may cause a 0.11 percent decrease of the country's GDP while TTIP may cut the GDP by 0.09 per cent.
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