DT e-Paper, Saturday, 12 November, 2016

Opinion 21
Preparing for the
Trans-Pacific Partnership?
The stakes are high for Bangladesh
DT
SATURDAY, NOVEMBER 12, 2016
TPP may affect Bangladeshi exports negatively
BIGSTOCK
• Esam Sohail
One of the most pressing
items before the United
States Congress in its
upcoming lame-duck
session, or at the onset of its new
session in January will be the
ratification of the Trans-Pacific
Partnership (TPP) which was
signed in February this year by
12 countries in the Pacific Ocean
Basin.
Simple numbers tell a story
of the gigantic potential of TPP:
Those 12 countries hold almost
900 million consumers and
account for almost 40% of the
world’s GDP.
The treaty will go into effect
once all countries ratify, or two
years after countries combining up
to 85% of the pact members’ gross
national product have ratified --
whichever is sooner.
In reality, this means that
countries where dialogue and
debate have to take place because
of independent executives and
multi-party legislatures will be
delaying the birth of the TPP
trade area longer than nations
like Brunei or Vietnam which,
like Bangladesh, have monolithic
governance structures with party,
executive, and legislative entities
fused as one.
For Bangladesh, the stakes
couldn’t be higher. As the TPP
protocols seek to harmonise
(and eventually remove) tariff
structures, regulatory frameworks,
With Bangladesh’s potential for export of value-added products to TPP
members, it is not inconceivable that many of these developed countries
may just find fellow members Vietnam, Peru, and Malaysia more
attractive for the import of the same products
intellectual property laws,
environmental and human rights
across its members, it is inevitable
that eventually there will be a
preference towards trading within
the bloc rather than outside.
With a significant portion of
Bangladesh’s textile trade being
marketed to North American
buyers and the potential for export
of further value-added products in
pharmaceuticals and information
technology to TPP members
US, Canada, Australia, and New
Zealand, it is not inconceivable
that many of these developed
countries may just find fellow
members Vietnam, Peru, and
Malaysia more attractive for the
import of the same products.
This will depend, of course,
on the speed with which tariffs
and regulations are harmonised
across the bloc, and also upon the
cost differential between the same
product/service that is exported
from Bangladesh and from a TPP
pact competitor.
As more products and services
yet unknown are developed,
especially in non-traditional
sectors, those outside the TPP
might find entry into their future
markets a harder task as well given
that the TPP members will have
had a head start.
Combined with the concerns
with American Generalised
System of Preferences (GSP) rules,
which right now continue not to
cover Bangladesh, the impact on
Bangladesh’s current and potential
export sectors could be significant,
and in a bad way, as a result of
TPP coming into effect in the next
couple of years.
The more optimistic of the
policy-makers and civil society
types have suggested that
alternative blocs like BIMSTEC
or APEC or something else with a
catchy name and catchier alphabet
soup moniker could be an antidote
for TPP blues. That is being more
hopeful than common sense
would warrant.
The overarching fact is that
when it comes to high-return
consumer markets for Bangladeshi
products and services today and
in the near future, replacing the
United States, Canada, or Australia
with, say, India, China, or Russia
is simply not an option given the
need, purchasing power, and
indigenous capacity of the latter
set of countries.
So, the Trans-Pacific
Partnership (TPP) will likely go
into effect sometime towards the
end of 2017. What is Bangladesh
doing to prepare for it in realistic
terms? One option would have
been to explore seriously the
possibility of joining it.
The problem with that
approach is that the pact is part of
the Anglosphere’s broader strategy
of containing the influence of
China and, to a lesser degree,
India, and the current Bangladesh
government’s visible dependence
on those two Asian countries
makes it an unlikely candidate
for TPP expansion, were that
expansion even a possibility.
A second mitigating option
would be to create swiftly the
environment that could bring
Bangladesh back under the aegis
of GSP. This is easier said than
done as the arrested efforts of the
last couple of years have shown.
So far, the incumbent government
seems to have made half-hearted
efforts, if that, to address specific
concerns of Washington about
labour and environmental rights
specifically, and democratic
governance broadly.
The third response could very
well be getting a larger market
share in a giant consumer market
like the European Union. The issue
with that would be that already
90% of EU’s Bangladesh imports
are textiles, leaving little room to
grow in this sector -- especially
with the new agreements with
North African countries putting
them into play as exporters too.
Herein, there has been some
growth in the export of services
from Bangladesh, with the sector’s
trade deficit in EU’s favour
reduced by about a third between
the 2012 and 2015 fiscal years. In
other words, there is a possibility
of growth in some non-traditional
export sectors for European
consumption. The caution would
be the volatility of EU itself, in
the aftermath of Brexit which has
triggered similar thoughts in other
countries.
The important thing is to be
prepared as TPP comes to reality
sometime next year. So far, it
has been hard to detect concrete
action plans that reassure that
such preparation is in the offing. •
Esam Sohail is an educational research
analyst and college lecturer of social
sciences. He writes from Kansas, USA.