TICFA to boost economic relations with US
Containers are being trucked out of Chittagong Port. The proposed TICFA will open up opportunities for Bangladesh and the US to further broaden bilateral trade relations.Photo: STAR
Strengthening the Bangladesh-US trade and economic relations is extremely important for maintaining the pace of sustainable economic development of Bangladesh. The proposed Trade and Investment Cooperation Framework Agreement (TICFA) will open up opportunities for both Bangladesh and the US to further deepen and broaden trade and economic relations for mutual benefit.
TICFA will also protect and promote our interests in areas of transfer of technology, compulsory licensing (including in sectors like pharmaceutical ingredients, biotechnology, energy related technology transfer, etc) and technical assistance for capacity building under the terms of the TRIPS Agreement.
The US, like other developed countries, is required to comply with these terms as an obligation under the rules of the World Trade Organisation.
Bangladesh's proposal for inclusion in TICFA the words like "to protect the fundamental labour rights, adherence to ILO conventions and internationally recognised practices on labour issues", is most comprehensive and generalised commitment on the whole spectrum of the labour related issues beyond our commitments under ILO or our domestic laws.
Whereas the US has proposed only four specific areas already covered by our domestic laws and within the scope of our ILO commitments. With or without Trade and Economic Cooperation Forum (TECF) agreement, we are obliged to comply with them. To tag duty-free and quota-free market access with TICFA is only a frivolous effort to say the least.
The misguided negotiations between 2003 and 2012 on TIFA/TICFA have caused Bangladesh immense losses, depriving the country more beneficial and deeper access to the US market for a decade till to date.
TICFA, like similar agreements with most of the US trading partners, is an essential first step, under US law, to chart the future of Bangladesh-US trade relations giving both the parties a framework under which the trade relations will develop. The next step from there could be negotiating, under the TICFA joint forum, deeper bilateral free trade including the duty-free market access to the US.
TICFA provisions on labour issues shall entitle Bangladesh to comply only with its domestic laws on the respective labour issues and its ILO (International Labour Organisation) obligations. Without TECF, the US will be free to impose its own domestic labour laws on imports from Bangladesh.
Moreover Bangladesh is very much committed to its ILO commitments enforced under our domestic laws and regulations. Bangladesh accords freedom of association of employed workers, effective recognition of workers' rights to engage in collective bargaining, elimination of child labour and elimination of discrimination in respect of employment and occupation in accordance with its own labour laws and its specific commitments under the ILO.
Our garment sector, free from child labour, has already taken an action programme and has set up a taskforce to monitor and ensure due compliance with laws and regulations of the country, particularly on labour welfare and safety issues.
The trade bodies in the garment and textile sector are providing awareness buildup among member factories. This awareness is not only through visual presentations but through posters, leaflets, one day training and regular fire drills. The taskforce with the technical cooperation of Bangladesh University of Engineering and Technology, and Fire Service Department have started visiting factories to improve their safety standards.
The trade bodies have also urged their members to ensure monthly equipment maintenance and maintain a water reservoir in each building. Also, they have urged the factories to ensure a proper storage system, chemical safety, electrical safety and well maintained fire exits which can be properly utilised.
There are three types of training being currently given:
1. Factory-based workers training
2. Mid-level management training
3. Training for trainers
The US, apart from being our foremost export destination, is the second largest investor in Bangladesh after the UK. The US participation in our economy has been possible because unlike US, Bangladesh pursues unilaterally a very liberal and open trade in goods, services and investment policies.
-Total US investment is around $1 billion. Over $2 billion in new US investment is under negotiation for power plants, coal mines and fertiliser plants.
-Nearly 500 American companies are active in Bangladesh. US banks and insurance companies, like Citibank and AIG are operating in Bangladesh. Investment in the energy and power sectors is sizable, led by Chevron/Unocal.
-US companies export wheat, cotton and other agricultural products duty free. A lot of US products and services -- machinery, generators and gas turbines, personal care products, and even stained glass window treatments -- have entered Bangladesh's growing consumer market.
-The US is the largest export destination for Bangladesh. The volume of our trade with the US was $5.88 billion in 2011-2012 of which our export was $5.10 billion at 15.3 percent duty and import from the US was $708 million mostly at less than 5 percent duty.
-Garment, as 95 percent of our exports go to the US, is subject to 15.3 percent most-favoured-nation tariff and as such faces very stiff competition from duty free suppliers and exports from giants like China, India, Pakistan and others severely diminishing the welfare gains of Bangladesh's garment workers, more than 80 percent of whom are women.
-Although Bangladesh is included in the GSP (generalised system of preferences) facility of the US renewed until July 31 of 2013, the product coverage of Bangladesh's exports is less than 1 percent as most of Bangladeshi exports to the US, including garment, is outside the GSP list.
-Items eligible to enter the US duty free under the GSP scheme: tobacco, plastic bags and articles, golf equipment, ceramic products, cereal-based prepared food, shrimp, jute and jute goods, hand-woven cotton carpets, textile floor coverings, tent, spectacles and goggles and headgears other than rubber and plastics.
To strengthen sustainable mutual trade relations, Bangladesh and the US must conclude TICFA, and in the meantime should open up and extend to Bangladesh an early harvest market access facilitation package as follows:
-Include all products exported from Bangladesh in the US GSP list
-Provide on reciprocal basis services sector market access in modes 1, 3 and 4
-Allow on reciprocal basis access to US public procurements.
-Expedite transfer of US registered technology, including green technology to Bangladesh as an obligation under the WTO. The transfer of technology and compulsory licensing should include, among others, pharmaceutical ingredients, biotechnology, green technology, coal gasification and energy related technology, etc.
-Provide all assistance to strengthen our compliance requirements.