TICFA a launching pad for mutual cooperation

Sarwar Md. Saifullah Khaled | Published: December 28, 2013 00:00:00 | Updated: November 30, 2024 06:01:00

Bangladesh has signed the much-talked-about Trade and Investment Co-operation Framework Agreement (TICFA) with the US after more than a decade of wrangling with the Shakespearian hesitation 'to be or not to be' from the Bangladesh side. It is hoped that the signing of the deal in Washington on November 25, 2013 will raise chances of Bangladesh getting back duty-free access to the US market for its products after the suspension of the Generalised System of Preferences (GSP) trade privileges. Bangladesh is currently the 59th largest goods trading partner of the US with $5.4 billion in total bilateral goods trade during 2012.
In June 2013, the US suspended the eligibility of Bangladesh for tariff benefits. The GSP programme aims at promoting economic growth in the developing world by providing preferential duty-free entry for up to 5,000 products one of 126 designated beneficiary countries and territories. The suspension was based on insufficient progress by Bangladesh in giving workers internationally-recognised workers' rights. In July 2013, the United States Trade Representative (USTR) provided Bangladesh with an Action Plan on workers' rights and safety that if implemented, could provide a basis for the US to consider the reinstatement of GSP trade benefits.  
The US first broached the idea for a trade and investment agreement in 2001 with the name 'Trade and Investment Framework Agreement (TIFA)'. Negotiations slowed down due to change of government in 2006. The negotiations resumed in 2009 after the Awami League came to power. By that time, the TIFA was renamed as the TICFA.
Bangladesh has always been fearful that the agreement will force it to talk issues that the country may not like to discuss and the US may exert political pressure to press its demands. The cabinet on June 17, 2013 cleared it after the worst-ever building collapse that killed more than 1,100 people and the US suspended the GSP privilege that some products enjoyed. Bangladesh became pro-active as the GSP suspension had been seen as 'sending bad image' of the country to other markets. Frequent incidents of factory fire also made it easy for the US to press Bangladesh for the agreement under which the labour issues will also be discussed.
TEXT OF TICFA ACCORD: The following is the text of the TICFA Agreement: "The Government of the United States of America and the Government of the People's Republic of Bangladesh (individually a "Party" and collectively the "Parties"): Desiring to enhance the bonds of friendship and spirit of cooperation, to expand trade, and to strengthen economic relations between the Parties; Recognizing the importance of fostering an open and predictable environment for trade and investment; Recognizing the benefits the Parties can derive from increased trade and investment, and that trade-distorting investment measures and investment-constraining and protectionist trade measures can reduce these benefits; Recognizing that both Parties are signatories to the United Nations Convention Against Corruption, and the importance of promoting transparency and adhering to the Convention, particularly in matters related to trade and investment; Recognizing the essential role of private investment, both domestic and foreign, in furthering growth, creating jobs, expanding trade, improving technology, and enhancing economic development; Recognizing the increased importance of trade in services between their economies; Taking into account the desirability of non-tariff trade barriers in order to facilitate increased trade among the Parties; Recognizing the importance of providing adequate and effective protection and enforcement of intellectual property rights and adherence to intellectual property rights norms in accordance with the World Trade Organization Agreement on Trade-Related aspects of Intellectual Property Rights, the Berne Convention on the Protection of Literary and Artistic Works, and any other intellectual property rights-related international agreements as applicable to the Parties; Recognizing the importance of improving the observance and promotion of workers' rights to both countries' economic welfare; respecting, promoting and realizing in each Parties' laws and practices the fundamental labor rights enumerated in the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-Up (1998); and ensuring the effective enforcement by the Parties of their respective labor laws; Recognizing the importance of protecting and preserving the environment in accordance with each Party's environmental laws, and desiring to ensure that trade and environmental policies are mutually supportive in the furtherance of sustainable development; Desiring to encourage and facilitate contact between enterprises and other trade and investment related groups in each other's territories; Acknowledging the desirability of resolving trade and investment matters between them as expeditiously as possible; Desiring to reinforce the rules-based multilateral trading system embodied by the World Trade Organization ("WTO") by entering into mutually advantageous arrangements, in keeping with the WTO agreements; Noting that the Parties are Members of the WTO and affirming that this Agreement is without prejudice to the rights and obligations of  the Parties under the agreements, understandings, and other instruments  related to or concluded under the auspices of the WTO; Noting the Treaty Between the United States of America and the People's Republic of Bangladesh Concerning the Reciprocal Encouragement and Protection of Investment ("Bilateral Investment Treaty"), signed on Mach 12, 1986, between the Parties and affirming that this Agreement is without prejudice to the rights and obligations of the Parties under the Bilateral Investment Treaty; Seeking to create a mechanism for further dialogue on initiatives for expanding their trade and investment through enhanced cooperation and more comprehensive agreements.                        
"Have agreed as follows: Article one: The Parties affirm their desire to promote an attractive climate in both the countries and to expand and diversify trade in products and services between the Parties. Article two: 1. The Parties hereby establish a United States-Bangladesh Forum on Trade and Investment ("the Forum") comprising representatives of each Party. The Bangladesh side shall be chaired by the Ministry of Commerce; and the United States' side shall be chaired by the Office of the United State Trade Representative. Both Parties may be assisted by officials of other government entities as circumstances require. 2. The Forum shall meet at such times, in such places, and through such means as the Parties may agree. The Parities shall endeavor to meet no less than once a year. Article three: The Forum shall: 1. monitor trade and investment relations between the Parties and identify opportunities for expanding trade and investment; 2. consider specific trade and investment matters of interest to the Parties; 3. identify and work to remove impediments to trade and investment between the Parties; and 4. seek the advice of the private sector and civil society, where appropriate, on matters related to the Forum's work. Article four: Either Party may refer a specific trade or investment matter to the Forum by delivering a written request to the other Party that includes a description of the matter concerned. The Forum shall take up the matter promptly after the request is delivered unless the requesting Party agrees to postpone discussion of the matter. Each Party shall endeavor to provide an opportunity for the Forum to consider a matter before taking actions that could adversely affect trade or investment interests of the other Party. Article five: This Agreement shall be without prejudice to the law of either Party or to the rights and obligations and privileges of either Party under any other agreement. Article six: This Agreement shall enter into force on the date that the Parties notify each other by exchange of letters that they have completed the internal procedures necessary to implement the Agreement. If the Parties do not notify each other on the same date, the Agreement shall enter into force on the date the later notification is made. Article seven: Either Party may terminate this Agreement by providing written notice of termination to the other Party. The termination shall take effect on a date the Parties agree or, if the parties cannot agree, 180 days after the date of notification".      
TRADE BENEFITS FOR BANGLADESH: The US is the single-biggest export destination of Bangladesh products from where about 30 per cent of the total export earnings come. But the main export item, readymade clothes do not enjoy the zero-duty facilities and have to pay 16 to 32 per cent duty. Bangladesh has been demanding duty-free market access for its cloths. But the US on different occasions said the issue would be discussed only in the platform that the TICFA would create. In the first meeting after the signing of the TICFA, according to the Ministry of Commerce, they kept GSP and the readymade clothes duty-free market access issues on the agenda.
Dwelling on the TICFA, Saman Kelegama, Executive Director of the Institute of Policy Studies of Sri Lanka says that "southern countries most often ignore the details of the trade arrangement at the start and thereby undermine the cost of market access". He explained how the US policy-makers had imposed on Sri Lanka a pre-condition for its readymade garment products to access the US markets. "The conditions imposed by the US included fulfilling the stipulated rules of origin with a provision of reverse purchase of US fabrics; amending IPR (Intellectual Property Rights) laws to remove obligations for compulsory licensing and withdraw the competition policy legislation; and liberalisation of the capital account for trade exchanges with the US. The same story holds for Chile and Singapore. After signing bilateral trade agreements they have lost the authority to exercise control over capital outflows to the US". The US is not the only country that pushes for bilateral agreements. The European Union, Japan, and even India, do the same.
The TICFA has been signed at a critical juncture at the domestic political level when the ruling party has a performance deficit or legitimacy crisis on domestic front. In such cases, the ruling elites of the weaker country and the major opposition party as well may seek external support by giving the stronger party what it wants to help them both earn the political 'confidence' of the global superpower leaving the people behind to suffer and struggle. The TICFA, let us conclude with minor changes in Charles Dickens's words, 'is the best of Agreement' and 'is the worst of Agreement' depending on future to spell out as to how effectively with strength and sagacity a LDC like Bangladesh can capitalise it in its dealings with a superpower like the US.
The writer is a retired Professor of Economics, BCS General Education Cadre.
 sarwarmdskhaled@gmail.com