Ticfa to take off
After more than a decade of talks, the government yesterday finally gave the go-ahead to the signing of a crucial deal that is expected to accelerate trade and investment with the US.
The draft Trade and Investment Cooperation Forum Agreement (Ticfa) that the cabinet yesterday approved says the two countries will foster an open and predictable environment for trade and investment.
Washington has welcomed the cabinet's decision to approve the Ticfa while Dhaka is waiting for an opportune moment to sign the agreement either in the United States or in Bangladesh.
“We welcome the cabinet's decision to approve the Ticfa and look forward to further discussions so that the agreement can be signed in the near future,” US embassy spokesperson Kelly McCarthy told The Daily Star yesterday.
The deal is expected to force Bangladesh to take a clear stance against corruption and promote fundamental labour rights laid out in the ILO declaration of 1998 and effectively enforce the local labour law.
The deal will also push Bangladesh towards enforcing intellectual property rights in line with the WTO rules.
Bangladesh will also open its service sector to US investors.
The two countries will form a forum to discuss these issues and barriers to trade and investment.
It is the difference of opinion over how to improve labour standards that took the government a long route to finally okay the deal.
Bangladesh wanted a “gradual” improvement in labour standards while the US did not want any such qualifier.
The second stumbling block was the foreign ministry's objection to a rule that stipulates immediate upgrade to labour standards.
The Ticfa draft was supposed to be approved at a cabinet meeting on May 13, but was turned down as Foreign Minister Dipu Moni, one of the key players in the deal, was not present at the time.
The government's decision to sign the deal came amid threats from the US to scrap or reduce preferential trade benefits to Bangladesh exports as the US is seriously questioning labour and safety standards in the wake of the Rana Plaza disaster that killed over 1,100 garment workers.
The verdict on the Generalised System of Preference (GSP), a scheme that gives trade benefits to Bangladesh, is expected to come by the end of this month.
Reacting to the government's decision, analysts said it is a timely move to boost business with the US.
However, concerns remain over opening up of the services sector to foreign investors and adherence to Intellectual Property Rights (IPR).
Bangladesh is exempted from abiding by the IPR until 2021 under the WTO. But agreeing to IPR norms with the US may erode that privilege.
The country just as India is reluctant to open up its services sector right now as local business may be affected.
Talks for signing an agreement known as the Trade and Investment Framework Agreement (Tifa) started in 2002 although the unofficial talks started a lot earlier in 1992. Later, the Tifa was renamed Ticfa.
The US, so far, has signed the Tifa or Ticfa or similar agreements with 92 countries and regional associations and groups.
A joint forum on trade and investment, to be formed with representatives of each party, will meet no less than once a year, according to the draft.
While defending the reasons for signing Ticfa, Commerce Minister GM Quader said among South Asian nations only Bangladesh and Bhutan did not sign the agreement. “Even India has signed a similar agreement with the US,” he added.
Trying to allay fears over IPR, Quader said, “Ticfa will not hamper the country's intellectual property rights and bilateral or multilateral or WTO trade benefits, as it is a separate bilateral agreement.”
Either party may terminate the agreement by providing a written notice to the other party. The termination will take effect on a trade the parties agree to. If the parties cannot agree, the termination will be effective 180 days after notification.
“Bangladesh is now looking for an opportune moment to sign the much awaited deal. We want to sign the agreement at a bigger occasion when high profile government officials of the two countries will attend the signing ceremony,” a senior official at the foreign ministry told this correspondent yesterday.
As per the procedure, the official said, the foreign ministry would officially inform Washington soon about the cabinet's approval as well as Dhaka's readiness for signing the agreement and seek a convenient time.
This agreement might be signed in September when both Prime Minister Sheikh Hasina and Foreign Minister Dipu Moni are expected to be in the US to attend the UN General Assembly.