Bangladesh might receive some short term relief from the US president-elect Donald Trump's decision to quit the Trans-Pacific Partnership (TPP) trade deal, surmised an economic expert. President-elect Trump had made an announcement to this effect on his first day in the office.
The expert however, opined that in the long run it might spell doom as such an announcement indicated that Trump is determined to go ahead with protectionist policies. In the long run, this will have a negative impact on the multilateral trading regime, he explained.
From the long run point of view, Bangladesh and other developing economies would risk getting marginalised in international trade, the economist opined.
Economist Dr. Zahid Hussain of World Bank fame expressed the view that in the short run Bangladesh will not have much to bother and will be buffered from the risks posed by this announcement. This announcement directly impacts Vietnam’s potential tariff-free market access to the United States.
At present, Bangladesh is facing very stiff competition from Vietnam. Also, Vietnam is a member of the 12-nation trading bloc that is in the making. This bloc caters specially to export of readymade garments (RMG) to the U.S.
Closer home, first Vice-President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), Shafiul Islam, expressed the opinion that cancelation of the TPP deal augurs well for Bangladesh.
Islam explained his view, stating, “As long as TPP is in place, Vietnam is slated to get better market access to the US along with Canada and Australia. This results in uneven competition for Bangladesh in the US market. In the absence of TPP, the playing field for Bangladesh will be more even vis-à-vis Vietnam.
Figures for apparel exports to US for the year 2015 indicate that Vietnam had touched the US $ 10.56 billion mark whereas the corresponding figure for Bangladesh stood at US $ 5.40 billion.
The World Bank economist however, sounded less upbeat. Dr. Zahid said, “The repeal of TPP should be seen in the wake of how the global trade regimes will behave in the future. Increase in protectionist measures adversely impact multilateral trade. Bangladesh will fail to make any capital of this in the long run.”
Speaking on the subject, the Bangladesh Tariff Commission (BTC), expressed the view that their RMG export was faced with little competition from Vietnam post the signing of the 12-nation trade agreement.
Earlier, the BTC had submitted its study report to the commerce ministry which stated, “Our country is neither in a position to join the TPP deal nor do we need to do so.”
The TPP deal entails that Vietnam will get a better market access to US and also be able to enjoy a tariff free facility. However, it is to be effected in a phased manner and elimination of all tariffs will take a good five years. In addition, it would be binding on Vietnamese apparel manufacturers to comply with some stringent rules of origin to take the advantage of duty-free access.