Tougher competition in global trade awaits Bangladesh from next year when a mega trade deal among countries accounting for over 39 percent of the global GDP is scheduled to come into effect, sans Dhaka.
Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement between the 10 Asean states and Australia, China, India, Japan, South Korea and New Zealand.
Negotiations were formally launched at the Association of Southeast Asian Nations (Asean) Summit in Cambodia in November 2012.
Following the seventh RCEP Intersessional Ministerial Meeting taking place in Siem Reap, Cambodia on March 2 this year, the deal is set to witness fruition from this year’s end.
The RCEP deals with goods, services, trade and investment, technical and economic cooperation, e-commerce and intellectual property rights.
The participating countries, including Bangladesh’s competitors in 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.
While they will be able to do business among the RCEP members at zero-tariff, Bangladesh will still be counting duty on export.
“Firstly we will face disadvantages as our competitors will enjoy duty benefits on export of yarn, fabrics and garment items among the RCEP participants,” said A Matin Chowdhury, managing director of Malek Spinning, a leading spinner and garment exporter.
“If the deal goes through, Bangladesh will be pushed to become solely a garment stitching nation as the local yarn and fabrics manufacturers will lose their competitiveness,” Chowdhury told The Daily Star last week.
“Our current trade privilege would face further challenges if the RCEP is implemented,” Ahsan H Mansur, executive director of Policy Research Institute, said over the phone.
“We have to compete in the open world. We need to enter the RCEP even if it means reforming some of our old trading policies as it is a broad organisation. We may have the chance to enter the club by fulfilling some conditions,” he said.
“It is a club. Any club has some conditions for membership. We are a highly protectionist country in terms of ease of doing business. Any club notices whether prospective members can fulfill conditions for inclusion,” said the researcher.
In contrast, Bangladesh’s policymakers appear to be still in the process of grasping the idea for such a move.
“We have not taken any measures yet to be a member of the RCEP,” said Md Shafiqul Islam, additional secretary (free trade agreement) to the commerce ministry.
“We may launch a study soon to assess the impacts of the RCEP on Bangladesh’s global and domestic trade. If it is possible, Bangladesh may join the RCEP in the future,” he said.
In 2017, prospective RCEP member states accounted for a population of 3.4 billion people or 45 percent of the world’s population and about 40 percent of world trade.
The 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, United States President Donald Trump signed a memorandum that stated withdrawal of the country from the TPP, a move which is seen to improve the chances of success for the RCEP.
According to estimates by the PwC, the GDP of the RCEP member states is likely to amount to nearly $250 trillion by 2050.