Bangladesh stands to lose $101.6 million of business a year if the Transpacific Partnership (TPP), the biggest free trade deal yet, is signed by 12 Asia-Pacific nations, said a study.
Initiated by the US, TPP is a proposed regional free trade agreement that is currently being negotiated by Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.
TPP is one possible pathway toward realising the vision of a free trade area of the Asia-Pacific, a key driver of global economic growth and close to half of all global trade. TPP will open new trade and investment opportunities for the Asia-Pacific region.
But the countries like Bangladesh, excluded from TPP, will face high tariff barriers for its exports to the region. Bangladesh's exports to Asian markets grew 11.02 percent to $3.32 billion in fiscal 2013-14 from the previous year, government data shows.
Talks began in 2005 and member countries set the goal of wrapping up negotiations in 2012, but contentious issues such as agriculture, intellectual property, and services and investments have caused negotiations to continue
The mega deal will affect the country's GDP growth by 0.11 percent, according to the study commissioned by the Chinese government to find out the impact of the deal on its economy.
The study was conducted by Mohammad Masudur Rahman, a Bangladeshi-born visiting professor of the University of Zhejiang's School of Economics and Management, and Qiner Jiang, a professor of the same university.
The study found that China would be the biggest loser for the deal, as its stands to miss out on business worth $2.09 billion a year.
Although Bangladesh is not directly linked with the TPP, it will still be affected as some of the members of the deal are competitors of Bangladesh, said Rahman.
Vietnam, for instance, is a major competitor of Bangladesh for garment exports to the US market. Vietnam enjoys lower tariff at 8.38 percent, while Bangladesh pays 15.61 percent duty on exports of garment items to the US market.
“If Vietnam enjoys duty-free benefit under the TPP, its competitiveness will increase further to the US market while Bangladesh's competitiveness will decline further,” Rahman said.
At present, the US is the single largest export destination for Bangladeshi garment items, with more than $5 billion worth of products exported a year.
Bangladesh paid $828 million in taxes to the US customs last year and $3.38 billion over the last five years, according to data from the commerce ministry.