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Bangladesh joining RCEP! https://www.observerbd.com/news.php?id=333294
Published : Thursday, 30 September, 2021 at 12:00 AM
170
M S Siddiqui
Bangladesh joining RCEP!
Regional Comprehensive
Economic Partnership
(RCEP) is regional
economic agreement
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).
The deal aims to lower
tariffs, open up trade in
services and promote
investment to help emerging
economies catch up with the
rest of the world. The RCEP
is especially expected to help reduce costs and time for companies by allowing
them to export a product anywhere within the bloc - without meeting separate
requirements for each country.
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.
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 center 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 centered on China is a reality for the
Asian nations 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.
Vietnam's rapid economic rise and success in East Asia are being followed by
countries in South Asia, like Bangladesh.
Aspirant 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 neighboring 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.
Bangladesh has missed a trade expansion opportunity as it stayed away from the
RCEP. The country will miss out on the potentials of a huge market access to
overcome the post-LDC shocks. Government has not even applied, nor was
Dhaka approached. But LDCsMyanmar, 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) are 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.
Secondly, the trade diversion effect of the RCEP will affect textile exports from
non-RCEP members. Thirdly, 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.
This is an ambitious free trade agreement (FTA) and shall deal 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.
It has been reported by a local daily that Bangladesh has decided to join the
world's largest trading bloc, the RCEP, to stay eligible for duty-free trade
facilities in the markets of nearly one-third of the global economies after it
graduates to a developing nation in 2026. The commerce ministry will send a
formal proposal to the RCEP headquarters, conveying the country's interest in
availing a membership to the bloc.
Bangladesh is currently associated with three multilateral economic alliances -
the Developing Eight (D8), the Asia-Pacific Trade Agreement (APTA) and the
South Asian Free Trade Area (SAFTA). Unfortunately, the officials of Ministry
of Commerce use to give contradictory statements regarding joining any free
trade block or singing bilateral FTA. The National Board of Revenue (NBR) is
against any sort of FTA with any country.
There is no end of contradictory decision of the government. China offered to
bear the cost of feasibility study of FTA with China but Ministry of Commerce
is very cool about the proposal. Bangladesh is under PTA with India under
SAFTA and now busy with feasibility study of Comprehensive Economic
Partnership with India.
MrTapanKanti Ghosh, Secretary of Ministry of Commerce, gave opinions in
writing in favour of joining the China-led RCEP to counter the potential impact
posed by the TPP. If it was not possible to join the RCEP, he suggested signing
a free trade agreement with China after graduating to a developing country.
The decision of joining RCEP seems confusing. The news supposed to be
headline of all national daily newspapers. Moreover, Bangladesh isyet to start
internal reform of laws and rules to facilitate join any trade block.
Most importantly, the tariff structure should be revised and implementation of
the trade facilitation agreement is precondition forjoining any such block like
RCEP. Unfortunately, the policy matter of national importance like FTA is
under the jurisdiction of a wing headed by an Additional Secretary of Ministry
of Commerce. Bangladesh needs strong policy decision from highest political
authority and monitoring the implementation before missing the last train.
The writer is a legal economist