RCEP trade bloc may push Bangladesh in back foot
The China-backed " new world " trade bloc will probably put Bangladesh on the trunk foot after LDC graduation when the united states will eventually lose preferential trade benefits, monetary analysts fear.
The country may get rid of its comparative edge over its competitor countries like Vietnam, Myanmar, Cambodia and Lao PDR when it comes to exports and luring foreign investment.
The 15 Asia-Pacific economies --10 members of ASEAN plus China, Japan, South Korea, Australia and New Zealand formed Sunday Regional Comprehensive Economic Partnership or RCEP which is being called a “mega trade bloc.”
“With the emergence of the brand new trade bloc, Bangladesh may lose competitiveness to its main competition in global trade and FDI after graduation from LDC status after 2024,” noted economist Prof Mustafizur Rahman said.
Major competitor Vietnam are certain to get additional trade benefits in comparison to Bangladesh as it has a bilateral trade manage the EU in fact it is also an associate of TPP in addition to the newly formed RCEP.
“The brand new trade deal can help it get better marketplace access facility in ASEAN plus five other countries including Japan and Australia even after 2024 when Bangladesh will eventually lose duty-free marketplace access,” Prof Rahman noted.
The brand new free trade bloc will be bigger than both the US-Mexico-Canada Agreement and the European Union. Many analysts believe RCEP's sheer size helps it be very significant.
Participants of the RCEP accocunts for nearly a good third of the world's population and account for 29 per cent of global gross domestic product.
The RCEP is expected to eliminate a variety of tariffs on imports within twenty years.
It also includes provisions on intellectual property or home, telecommunications, financial offerings, e-commerce and professional companies.
Prof Rahman said despite the fact that China offered duty-free marketplace access to 97 % Bangladeshi items, Bangladesh won’t get that many benefit beyond AFTA, whereas its competitors will get it.
Countries want Myanmar and Lao PDR can be an attractive investment destination for foreign buyers as they will attempt to get greater duty-free market access by buying RCEP countries.
Dr Selim Raihan, executive director of South Asian Network on Economic Modeling or SANEM, also expressed a similar take on Bangladesh’s foreseeable future in global trade.
“It will be a subject of concern for Bangladesh as ASEAN countries especially Vietnam are certain to get preferential trade benefits found in China, Japan, South Korea and Australia,” he described. He as well thinks that China, Japan, South Korea, Australia, even the EU and the US and can prioritise the various other RCEP countries for purchase.
“So, definitely Bangladesh will probably feel the pinch found in global trade following its LDC graduation,” he added.
To address the situation, Bangladesh should try to sign deals with Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation or perhaps BIMSTEC to enter market segments of Thailand and Myanmar, Prof Mustafizur suggested.
At one level, the country should try to create scope of negotiation with ASEAN and RCEP countries, nonetheless it will require enough preparation as the deal will be “reciprocal; not one way.”
The distinguished fellow of the centre for Policy Dialogue (CPD) likewise reminded that such discounts may lesser Bangladesh’s revenues as a result of low import duties and hinder local industries.
For finding your way through such deals, he suggested that in mid-term Bangladesh should make an effort to change its focus from revenues to FDI and job generation etc.
As well, Bangladesh will have to focus extra on increasing the caliber of products and raise criteria of labour, copyright, e-commerce and other relevant things.
Negotiations over the new RCEP deal began in 2012 and it was finally signed on Sunday on the sidelines of a meeting of the Association of Southeast Asian Countries (ASEAN).
India was also area of the negotiations, but it pulled out last year over considerations that lower tariffs could harm local manufacturers. Signatories of the offer said the door remained available for India to become listed on in the future.
AMERICA is absent from both RCEP and the successor to the Barack Obama-led Trans-Pacific Partnership or TPP, departing the world's biggest economy out of two trade groups that span the fastest-growing region on earth. The US exited TPP through the presidency of Donald Trump.
