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Published: 12:32 AM, 01 December 2019 Last Update: 12:13 PM, 02 December 2019

https://dailyasianage.com/news/207468/bangladesh-media-busy-with-indias--decision-about-rcep

Bangladesh media busy with India's decision about RCEP M S Siddiqui

The Daily Star, Bangladesh published a sub-editorial about apprehension of possible impact on India for not joining Regional Comprehensive Economic Partnership (RCEP), and this daily The Asian Age published another article advocating in favour of India's not joining the FTA. Both the articles are written by India origin writers. The media of Bangladesh is almost silent about status of Bangladesh regarding joining this FTA. India opted out of the deal in the last minute in fear of floods of cheap imports from China and dairy products from Australia and New Zealand, which, it thought, would affect local manufacturers and farmers. India has internal pressure from fundamentalist RSS not to join RCEP. Even without India, RCEP is poised to become the third-largest consumer market in the world, the RCEP bloc will account for a third of global GDP and have a market of nearly a third of the world's population. Bangladesh has missed a trade expansion opportunity as it stayed away from the RCEP. Bangladesh will miss out on the potentials of a huge market access to overcome the post-LDC shocks. Bangladesh has not even applied, nor was Dhaka approached. But LDCs like Myanmar, Cambodia, Laos are there. Still, there is time for us to apply with active support of friendly countries like China. Bangladesh is in a danger of competition from the RCEP. Participating countries, including Bangladesh's competitors in the apparel trade such as India, China, Vietnam, Indonesia, Myanmar and Cambodia, have been gearing up local industries involving textile, yarn and garment to reap the RCEP's benefits. Textile and apparel (T&A) is a critical sector under the RCEP negotiation. Notably, many of these T&A products are made through a collaborative supply chain in the Asia-Pacific region. While RCEP members will be able to do business with each other at zero tariff, Bangladesh will face duties on its exports. Bangladesh is going to face the prospect of becoming solely a garment stitching nation as its yarn and fabric manufacturers will lose their competitiveness. For example, clothing labeled "Made in Vietnam" often contains fabrics made in China from yarns spun in Japan. Because the RCEP intends to eliminate existing trade barriers between its members substantially, implementation of the agreement has the potential to facilitate the integration of regional T&A supply chain further and significantly shift the current pattern of T&A trade in the Asia-Pacific region. A research by two Bangladeshi economists and publish in a Journal in Japan also find that the import of RCEP will be adverse on competiveness of garment of Bangladesh.

The Asian economy accounts for about 30% of global economic output in purchasing power parity terms. With continuing economic reform, it could account for 47% by 2040 and 52% by 2050, with per capita incomes equivalent to Europe's today (ADB, 2011). That is a rapid rise from the 18% of the global economy it accounted for in 1980. A large increment of that growth has been the consequence of China's sustained growth, which has made it the world's second largest economy, its largest trader, and the largest trading partner of almost all Asian countries. Asian region is now and will remain the primary driver of global growth in the coming decades, but only if it can craft a cooperation agenda that embraces the entire region and has global objectives and reach. Successive waves of trade and industrial transformation have created a new centre of Asian economic activity that rivals western region in terms of its contribution to world output and world trade. Deeper integration in Asia is already centred on China and is likely to incorporate India more fully over the next decades. The growth of India up to 2040 may not be as rapid as was China's, or as sustained, but the scale of the country and its demographic profile suggest that it will bring further substantial adjustment in Asia and the global economy. Viet Nam's rapid economic rise and success in East Asia are being followed by countries in South Asia, like Bangladesh. New technology will also mean that countries have to continue to reform and manage the different integration pressures within the region and with the rest of the world. The rise of China and the accommodation of that by neighbouring countries and within the global system, as well as the impact of India's rise, will require elevated regional and global cooperation. The demographics and catch-up growth suggest that the trajectory of Asian economic growth is likely to continue to remain above global average rates through to 2040 and beyond. North America and Europe will have a smaller share of global economic output. The USA will be a smaller part of the global economy despite remaining the largest military power and likely the second largest economy. With two of the three largest economies and two of the largest populations in the world, Asia is, if it acts collectively, a major global force. Moreover, all the countries in Asia - industrialised, emerging, or developing - rely on an open external environment for development and prosperity. RCEP is regional economic agreement being negotiated t involving 10 ASEAN Member States (Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Viet Nam) as well as ASEAN's six FTA partners (Australia, China, India, Japan, New Zealand and the Republic of Korea). RCEP was launched in 2012 and aims to achieve a comprehensive, high quality and mutually beneficial economic partnership agreement amongst all the members. They have agreed in Bangkok on November 4, 2019 on signing a deal in February next year to have free trade among them except India. This is an ambitious free trade agreement (FTA) and shall deals with goods, services, trade and investment, technical and economic cooperation, e-commerce and intellectual property rights. The trade creation effect of the RCEP will significantly encourage its members to source more textile and apparel from within the RCEP area and form an ever more integrated regional T&A supply chain.

Second, the trade diversion effect of the RCEP will affect textile exports from non-RCEP members. Third, apparel exports from RCEP members would benefit from a more integrated regional T&A supply chain facilitated by the RCEP and demonstrate more competitiveness in the world's leading apparel import markets. RCEP is not simply another free trade and investment arrangement. It incorporates an important cooperation agenda, an essential element in building capacity for economic reform and mutually reinforcing regional development over time. Its cooperation agenda has an important political and security pay-off that will assist in ameliorating regional tensions and managing relations with the bigger powers, like China, Japan, and India. India has reservation about the Belt and Road Initiative (BRI) for investment in connectivity and geo-strategic territorial issues, and those outside it, like the US and Europe(in staking out Asia's interest and claims to ownership in and support of the global public good of an open economy. At present we are getting duty-free access to China, Japan, Australia, New Zealand, which we won't enjoy after 2024. Observers is worried to see that Bangladesh's market access is gradually squeezing as it faces trouble in EU market and might be out of US market as the world's largest economy has been inking future market agreements with India and many other countries in Asia and Africa. If the deal goes through, Bangladesh will be pushed to become solely a garment stitching nation as the local yarn and fabrics manufacturers will lose their competitiveness. Bangladesh should have to have some trade partners left to do business with when we will graduate from the LDC category in 2024. But no apparent initiative is there to prepare for the future. In contrast, policymakers appear to be still in the process of grasping the idea for such a move. Some observers wonder when they will come to a decision. The local media are also busy with India's decision of joining / not joining RCEP. Bangladesh cannot have luxury of remain out the regional process of economic, social and political integration. It should have independent identity in the South Asian map. Bangladesh will loss the importance and may also loss the identity in the regional business and politics. The writer is a legal economist. Email: mssiddiqui2035@gmail.com