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