The United States of America (USA) is the single largest export market for Bangladeshi products. But Bangladeshi products are yet to get any preferential market access to the US market, let alone Duty-Free Quota-Free (DFQF) access. Rather, the US administration suspended the Generalised System of Preference (GSP) facility in 2013. GSP, however, covered only one per cent of the total export to the country. Bangladesh government took some measures to regain GSP and sought review a couple of years back. There was no positive outcome. In the meantime, annual export to the US dropped from $5.91 billion in 2016 to US$5.68 billion in 2017, while import from the US rose to $1.46 billion in 2017 from $0.94 billion in 2016.
The government may finally decide not to seek anymore Review in this regard. Instead, it is now thinking to go for a Bilateral Free Trade Agreement (BFTA) with the US. Commerce Minister Tofail Ahmed last week publicly expressed his disappointment over the US policy of procrastination over the issue of GSP restoration. A day after making that statement, while inaugurating the 25th US Trade Show in Dhaka, the minister broached the idea of signing a BFTA with the US. He pointed out the country would soon graduate from Least Developed Country (LDC) status and then it would no longer be entitled to preferential market access like DFQF and GSP. Responding, the US ambassador in Dhaka said that it would need a lot of exercise to be undertaken and completed before signing a BFTA.
The idea of a BFTA with the USA was first promoted by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the country's apex trade body. This was in November, 2016, immediately after Donald Trump won the US presidential elections. Subsequently, the think-tank Bangladesh Enterprise Institute prepared a policy advocacy paper titled 'Foreign Trade Strategies-2030 and Beyond'. The paper elaborately discussed the case why Bangladesh should look for BFTAs with its trading partners, including the US.
President Trump's trade policy stance is clear. He prefers intensifying bilateral trade relations, strongly enforcing US trade laws. In the last month, US Trade Representative (USTR) Robert Lighthizer presented the Trade Policy Agenda and Annual Report of the Trump administration to the Congress. In his deliberation, Lighthizer said, "Trump administration will work aggressively to address trade imbalances, promote fair and reciprocal trade relationships, enforce US rights under existing trade agreements, and work with like-minded countries to defend our common prosperity and security against economic aggression."
So far, Bangladesh has obtained duty-free market access to many countries through multilateral trade negotiations under the World Trade Organisation (WTO). But the USA continuously denied duty-free market access to Bangladesh on the plea that the Doha Round negotiation of the WTO was not yet completed. And the Trump administration now is clearly disinterested in following the tenets of WTO trade regime.
Against this backdrop, some quarters have been canvassing the idea of BFTA as the only viable option for Bangladesh to gain higher access to the US market. But the country hardly has any experience with free trade agreement (FTA). It had taken initiatives to sign FTA agreements with a number of countries but no such agreements has yet been signed. In the past year, it was formally announced that the country's maiden FTA would be signed with Sri Lanka. The announcement is yet to materialise. The negotiations to sign BFTA with India and China have been put to the back burner while scattered discussions are going on to sign similar deals with Bhutan, Malaysia, Thailand, Macedonia, Mali, Nigeria, Myanmar and Mauritius. Thus, it would obviously be quite challenging a task for Bangladesh to negotiate a bilateral trade deal with the most powerful country of the world.
Moreover, the structure of the US FTA goes beyond trade in goods and services. It extensively covers investment, intellectual property rights and standards on labour and environment. The US claims to believe in 'deep integration' and so full liberalisation of goods and services are an inherent component of any BFTA with it. Any BFTA the US signs goes beyond the obligation of multilateral intellectual property rights (IPR) or Trade Related Aspects of Intellectual Property Rights (TRIPS) of the WTO. This is known as 'TRIPS Plus' as the US emphasises on more commitment on IPR. Thus, to get the full and permanent market access to US goods and services, a partner country requires the commitment to protect IPR beyond the WTO. The US also stresses on investment protection which embodies protecting the interests of the US-based multi-national enterprises (MNEs). The clause for investor-state dispute asks for arbitration, instead of going to the domestic court of the partner country, if any dispute with US investor arises. Finally, there are provisions for environment and labour standards. Any BFTA with the US can't be complete without inclusion of these two components.
The US has BFTA with 20 countries. These are: Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru and Singapore. No single country has negotiated a BFTA with the US after Donald Trump became the president.
BFTA with the US is actually a comprehensive agreement that supports economic and even political reforms in partner countries. This is one of the main reasons why very few countries sign BFTA with the US. In the case of Bangladesh, the idea of signing a BFTA with the US any time soon, thus, seems rather ambitious, if not unachievable.
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