TICFA Forum: What Bangladesh agenda should be in negotiations

The first meeting of the Ticfa (Trade and Investment Cooperation Framework Agreement) forum is likely to be held in Dhaka in end-April. Commerce Minister Tofail Ahmed is reported to have said that the Government plans to raise the GSP (generalised system of preferences) issue at the meeting. He emphatically said, "A commitment has been adopted at the WTO Bali ministerial Conference that duty-free and quota-free (DFQF) market access will be given to the least developed countries (LDCs). This will be discussed as the main agenda at the Ticfa meeting."
The spectrum of issues relating to EU-US GSP, DFQF market access for all LDCs and Ticfa need to be analysed and clarified in the light of respective global legal frameworks to decide appropriate policy approach of the government.
US SUSPENSION OF GSP: Resorting to trade restrictive measure the USA has suspended GSP for Bangladesh by a Presidential proclamation issued on June 27, 2013 which states " …  I have determined pursuant to section 502(d) of the 1974 Act, that it is appropriate to suspend Bangladesh's designation as a GSP beneficiary developing country because it has not taken or is not taking steps to afford internationally recognised worker rights to workers in the country."
POSSIBLE SUSPENSION OF EU GSP (EBA): The statement of Karel de Gucht, the EU Trade Commissioner, is worth mentioning statement in this regard. "I want to make it clear," he warned, "that Bangladesh -- or for that matter any other least developed country -- cannot take for granted the trade preferences it currently enjoys [in the EU market] under the 'Everything but Arms' scheme. The EU may consider appropriate action should there be no, or insufficient progress for Bangladeshi workers."
VALIDITY OF US AND POSSIBLE EU GSP REGULATIONS VERSUS    WTO TERMS OF GSP:  The generalised system of preferences (GSP) came into existence under a 1971 ten-year waiver on GATT (general agreement on trade and tariff). The MFN (most favoured nations treatment) clause (equal treatment to all members) was made permanent in 1979 through the GATT enabling clause that authorises all GSP programmes to operate under its provisions as interpreted by the WTO Appellate Body (India-EU-GSP Dispute:WT/DS246). GSP programmes are also to comply with WTO obligations including the decision on ILO core labour standards adopted under Paragraphs 4 and 8 of the WTO Singapore and DOHA Ministerial Decelerations.      
According to the US Congressional Research Service Report (Link: www.crs.gov RL33663) on Generalised System of Preferences for Members and Committees of Congress submitted on January 13, 2013, page 28), "Although the GSP is a unilateral and non-reciprocal tariff preference, any changes to the programme would need to be considered in the light of the requirements of the WTO Enabling Clause, as it has been interpreted by the WTO Appellate Body". Page 4 of the Report says, "Among other things, the Clause further provides, at 3(c), that any differential and more favourable treatment provided under the Clause shall in the case of such treatment accorded by developed contracting parties to developing countries be designed and, if necessary, modified, to respond positively to the development, financial and trade needs of developing countries."
According to EU GSP Regulation 2012 (Preamble - 4): It is to comply with World Trade Organisation (WTO) requirements, in particular with the Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries (the 'Enabling Clause'), adopted under the General Agreement on Tariffs and Trade (GATT) in 1979, under which WTO Members may accord differential and more favourable treatment to developing countries. [GTP GSP+ and EBA for LDCs]
ILO CORE LABOUR STANDARDS AND GSP: Under the WTO Singapore and Doha Ministerial Declarations on ILO core labour standards, there is no scope for members of WTO to restrict trade on grounds of state of compliance of core labour standards. The International Labour Organisation (ILO) is the only designated competent body to set and deal with these standards.
Singapore ministerial declaration (paragraph 4) states, "The International Labour Organisation (ILO) is the competent body to set and deal with these standards" and "We reject the use of labour standards for protectionist purposes, and agree that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question. In this regard, we note that the WTO and ILO Secretariats will continue their existing collaboration,"
According to the Doha Ministerial Declaration (paragraph 8), "We reaffirm our declaration made at the Singapore Ministerial Conference regarding internationally recognised core labour standards. We take note of work underway in the International Labour Organisation (ILO) on the social dimension of globalisation."
In the light of the above, provisions of US and EU GSP regulations that are inconsistent with the WTO terms of GSP are not applicable and actionable to the extent of such inconsistency.
The US and possible EU suspension of GSP for Bangladesh are in gross violation (as asserted by Dr Supachai Panitchpakdi, secretary-general of UNCTAD and former DG, WTO) of paragraph 4 of the preamble of EU GSP Regulation, WTO and mandatory obligations of Clause 2 (b) & 3 (c) of the 1979 WTO Enabling Clause as interpreted by the WTO Appellate Body (India-EU-GSP Dispute: WT/DS246) and the decision on ILO core labour standards adopted under Paragraphs 4 of the WTO Singapore Ministerial conference.  Dr Supachai Panitchpakdi held that "The decisions of the United States and the European Union to demand implementation of controversial labour standards in Bangladesh following an industrial tragedy that killed more than 1,100 people in April pose a serious threat to the rule-based global trading system."
Panitchpakdi said, "Labour rights and standards are something very sensitive to all developing and least developed countries at the World Trade Organisation, and when countries try to impose labour standards they are just distracting from the WTO's authority. …If trade majors want to impose labour rights,they should bring the issue to the WTO." It is unfair to punish countries outside of WTO by threatening denial of market access, he added.
Suspension of GSP for Bangladesh, being a restrictive measure taken on issues relating to labour standards, is in violation of the following mandatory provisions:
* Section 3(c) of the WTO 1979, Enabling Clause, which provides that any differential and more favourable treatment provided under the Clause "shall ... be designed and, if necessary, modified to respond positively to the development, financial and trade needs of developing countries"
* Para 164 of the of the Appellate Body report on India-EU-GSP Dispute: WT/DS246. "Paragraph 3(c) [of the Enabling Clause] mandates that the response provided to the needs of developing countries be 'positive'. 'Positive' is defined as "consisting in or characterised by constructive action or attitudes".  This suggests that the response of a preference-granting country must be taken with a view to improving the development, financial or trade situation of a beneficiary country, based on the particular need at issue.
But in dealing with the issue of compliance of ILO core labour standards by any GSP beneficiary country, both the US and the EU have failed to comply with the WTO mandate adopted in Paragraph 4, WTO Singapore Ministerial Declaration on ILO core labour standards.
EU is also required to comply with the EU-Bangladesh Cooperation Agreement, 2001, that among other things seeks to achieve the following:
(Article 2. 2)  to secure the conditions for and to promote the increase and development of two-way trade between the Parties in accordance with the Agreement establishing the World Trade Organisation (WTO) and to assist Bangladesh in diversifying its productive potential;
(Article 4.1) within the bounds of their respective competences the Parties are committed to conduct trade in accordance with the Agreement establishing the WTO.
EU EBA: Under the "Everything but Arms" initiative, Bangladesh continues to get duty- and quota-free access for all its products except for arms and ammunition for an indefinite period.
In February 2001, the Council adopted the "Everything but Arms" initiative (Regulation (EC) 416/2001), granting duty-free access to imports of all products from LDCs without any quantitative restrictions, except for arms and ammunitions. The EBA Regulation foresees that the special arrangements for LDCs should be maintained for an unlimited period of time so that they would not be subject to the periodic renewal of the Community's scheme of generalised preferences.
SUGGESTED AGENDA:  The total US GSP stands expired since July 31, 2013. "Legal authorisation for the GSP programme expired on July 31, 2013 (19 U.S.C. Section 2465). Therefore, as of midnight on August 1, 2013, imports that were previously eligible for duty-free treatment under GSP are subject to regular, normal trade duties. The U.S. Congress is considering legislation that would extend the authorisation of GSP beyond this date. …As long as the GSP programme remains without authorisation, there will be no public hearings and no requests for public comments for ongoing GSP country and product reviews and no final disposition of these reviews."
Under the prevailing state of affairs in the US Congress, extension of GSP is not forthcoming to say the least. Restoration of US GSP is therefore redundant.     Bangladesh should raise, instead of GSP, the issue of WTO DFQF market access for LDCs in the Agenda of the Ticfa Forum meeting with  the US.
Taking note of Para 182 of the Appellate Body report (mandatory) on India-EU-GSP Dispute: WT/DS246, Bangladesh should call upon the US (in the Ticfa forum meeting) and EU :
1. To Keep the issue of labour standards outside the jurisdiction of GSP or LDC DFQFMA scheme as mandated in the decisions on ILO core labour standards adopted under paragraphs 4 and 8 of the WTO Singapore and Doha Ministerial conferences respectively, so that the jointly agreed ILO, Bangladesh, EU and US Sustainable Compact & Bangladesh Action Plan to deal with all issues related to labour standards may be gradually implemented along with respective capacity development under supervision of the ILO.  
2. To adopt only positive programmes, in compliance with Paragraph 3(c) of the WTO Enabling Clause, characterised by constructive action, to facilitate and promote the trade of Bangladesh as the GSP/EBA beneficiary by including all products exported from Bangladesh in the US duty free list of products for LDCs, in order  to enhance the level of compliance through increased financial and management capacity as "special incentive arrangement for the protection of labour rights".  
3. To operationalise US duty-free and quota-free market access for all goods originating from Bangladesh as an LDC, adopted and prescribed in paragraph 36 of Annex F of the Hong Kong Ministerial Declaration in a manner that ensures stability, security and predictability prior to the next Ministerial Conference, in compliance with the declarations agreed and adopted in each of the first to the ninth (Bali) WTO Ministerial Conferences.
4. Product coverage of the duty-free, quota-free market access as stated above should be "all products originating from all LDCs" including products already covered under any unilateral FTAs or mutual preferential market access schemes including GSP.   
5. Bangladesh should call upon EU to notify its EBA scheme, prior to the next Ministerial Conference, as the DFQF market access scheme as adopted and prescribed in paragraph 36 of Annex F of the Hong Kong Ministerial Declaration in a manner that ensures stability, security and predictability.    
6. To establish Bangladesh-US Comprehensive Free Trade Agreement (CFTA) under the basic terms of Ticfa without prejudice to each other's rights and obligations under WTO. Similarly, efforts should be made to establish Bangladesh-EU CFTA without prejudice to each other's rights and obligations under WTO. CFTAs with US and EU are extremely important to safeguard long-term interest of Bangladesh which is going to be graduated out of list of LDCs in near future.  
The writer is Adviser, FBCCI and Chairman, FBCCI Standing Committee on WTO and RTAs.
 mahmed019@hotmail.com