Bangladesh overlooks RCEP despite risk of competition
Bangladesh has not displayed any interest in joining the world's most significant trade deal, Regional Comprehensive Economic Partnership (RCEP) mostly to safeguard its revenue generation from duties on imports.
Alternatively, none of the would-be RCEP signatories asked Bangladesh to become listed on their ranks.
The RCEP will likely be signed today towards the end of a summit of the Association of Southeast Asian Nations (Asean).
China initiated the RCEP as a free of charge trade agreement among itself, the 10 Asean states and Australia, India, Japan, South Korea and New Zealand. The negotiations were formally launched at an Asean summit in Cambodia in November 2012.
"We didn't join the RCEP. We've not shown interest in joining the offer although we knew about it.
The RCEP members did not give any proposal for all of us to become listed on this mega trade deal," said Sharifa Khan, additional secretary to the commerce ministry.
She had been serving, until very recently, as the in-charge of the ministry's Free Trade Agreement (FTA) wing.
Khan presumes there would not be any major negative effect on Bangladesh's export regardless if Bangladesh is not the main deal.
Because Asian markets are major sources for Bangladesh's imports, not exports, she said.
Echoing Khan's views was Md Shafiqul Islam, who recently retired from the commerce ministry and was responsible for the FTA wing as an additional secretary.
He also reasoned Bangladesh's disinterest it signing the offer for the plausible drastic drop in earnings generation from import duty.
Islam also affirmed that Bangladesh had not been invited to join the offer.
India withdrew itself from the set of signatories considering the fate of its domestic industries, because there is a likelihood of the invasion of Chinese goods in Indian markets, he said. Moreover, Bangladesh doesn't have that much of an event in FTAs with any country till date. "So, how will it handle such a huge trade deal where in fact the interests of the domestic industries are very much involved?" he asked.
"We are very much protectionists in international trade compared with other countries. So, it had been not possible to place a proposal to become listed on the platform."
"It is not like this we will get the power from other countries without giving benefit to them," Islam told The Daily Star over the telephone.
Commerce Secretary Md Jafar Uddin also said the Asian region, especially China, was the most significant area from where Bangladesh sourced its imports. For example, Bangladesh earns practically Tk 25,000 crore in a year as duty on imports solely from China.
So, the government's major earnings are made from the duties on imports from Asian nations, he said.
Moreover, Bangladesh didn't show interest in joining the deal since it was already enjoying duty advantages to Chinese markets as both a least developed country (LDC) and also beneath the Asia Pacific Trade Agreement (APTA).
Furthermore, midway through the existing year, the Chinese government offered duty-free usage of 97 % of goods originating in Bangladesh, for which there was you don't need to join such a trade group.
The Chinese trade benefits for Bangladesh will continue beneath the APTA even following the country graduates to become developing nation in 2024.
"Still we've taken an initiative to conduct a report on the impacts on Bangladesh from the signing of the RCEP," Jafar Uddin told The Daily Star over the phone.
Md Hafizur Rahman, director general of the World Trade Organisation (WTO) cell beneath the commerce ministry, said Bangladesh didn't even participate in the original negotiations to join the RCEP.
The opportunity of Bangladesh joining the RCEP is quite thin now as the participating countries will be ready to sign the ultimate deal, he said.
He said Bangladesh has been negotiating with Asean-plus-one at heart, that's, to be included in the club of the Asean.
Ahsan H Mansur, executive director of the Policy Research Institute, said Bangladesh should join such regional trade deals and also sign FTAs with major trading partners soon to enjoy preferential trade benefits after the country graduates to the ranks of developing kinds from the set of the LDCs.
Regarding the RCEP's effect on Bangladesh's export, Mansur said since Vietnam was also an associate of this mega deal, Bangladesh might face even more challenges in garment exports to global markets as Vietnam was a significant competitor of Bangladeshi apparel items.
Vietnam has recently signed FTAs with many countries such as for example China and trade blocs like the EU, he said.
Moreover, Bangladesh's international trade policies showcase the highest degree of protectionism among the South Asian nations.
He suggested easing the trade regime by slashing duties on imports to ensure that more countries or trade blocs show interest in signing trade handles Bangladesh.
Prof Mohammad Abdul Momen of the Institute of Business Administration of the University of Dhaka said a lower tariff for Vietnam beneath the RCEP would hurt Bangladesh's garment shipments.
He also suggested signing bilateral trade handles major trading partners.
In 2017, potential RCEP member states accounted for a population of 3.4 billion or 45 % of the world's population and about 40 % of world trade.
The full total gross domestic product (GDP) amounted to $49.5 trillion, more than half of it made up of that of China and India, surpassing the combined GDP of Trans-Pacific Partnership (TPP) members in 2007.
On January 23, 2017, US President Donald Trump signed a memorandum that explained withdrawal of the united states from the TPP, a move which sometimes appears to improve the likelihood of success for the RCEP.
According to estimates by the PwC, the GDP of the RCEP member states is likely to amount to practically $250 trillion by 2050.
