The 21st Century trading network: Grabbing the various bulls by the horn

Dhaka,  Wed,  23 August 2017
Published : 20 Apr 2017, 20:56:21
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The 21st Century trading network: Grabbing the various bulls by the horn

Imtiaz A. Hussain
Bangladesh must scurry to catch the last ship into a pivotal 21st Century trading network. It found some relief when Donald J. Trump won the U.S. presidential election: a comatose Trans-Pacific Partnership (TPP) became a quick casualty. We were spared the prospects of Vietnam's ready-made garment (RMG) exports into the United States, which had overtaken our own in 2015, from virtually displacing ours through TPP membership. We were still at odds with the United States over both the Generalised System of Preferences (GSP) and the Trade and Investment Cooperation Forum Agreement (TICFA): neither progressed fast enough to anchor our growth targets, and constant reminders to enforce labour principles got too one-track minded.

More at stake is our rocky relationship with free-trade agreements (FTAs). Though we have scattered negotiations here and there, there is no big fish in the net as yet. Whether that is by choice or not is a huge issue worth discussing; but the present thrust is on another development certain to impact our future trade prospects. In the shadow of a Trump Administration settling down, the Pacific Alliance (PA) countries of Chile, Colombia, Mexico, and Peru secretly got the ball rolling for a free-trade agreement with the Association of Southeast Asian Nations (ASEAN). Establishing an ASEAN-Pacific Alliance Framework for Cooperation being formed (in the third meeting of the ASEAN-Pacific Alliance Ministerial Meeting in 2016), exposes Bangladesh as an oddball, surrounded by countries with formal and growing trade relations in one continent where we (and many of those Asian countries) barely have a footprint (but where some of those Asian countries have begun making up for lost time in huge strides): Latin America. Not only may Vietnam squeeze us out in the United States, but may ultimately find more open Latin doors than we.

Our preference for FTA-free deals blinded us to this development: low-wage exporters rarely want to be anywhere near such arrangements. Having just opened an embassy in Mexico City, it is gratifying that mid-level Bangladeshi diplomats will meet their Mexican counterparts on May 07 in Dhaka to discuss broader issues; but the need to raise the trade ante more vigorously should not escape the opportunity. Our Southeast Asian neighbours, much like our dominant South Asian neighbour, India, just happen to be far more voluptuous traders than we have shown ourselves to be outside the RMG sector; and their Latin counterparts rarely seemed to have been as relentlessly seeking to diversify their partners as right now. There is a meeting-of-minds opportunity we may not only miss, but since such occasions are so far and few in between, we may also never find such a ripe occasion again. 

Mexico could fuel the Asian-Latin interest now that the North American Free Trade Agreement (NAFTA) is being taken to court (figuratively) by Trump. It just enacted legislation to diversify U.S. trade to other countries, particularly across Asia. Any Asia-Pacific (AP)-ASEAN deal would substantially expand the chronologically important Pacific pathways that Japan, South Korea, China, and India have already opened with Latin countries, in roughly that order, simply because of the increasingly hungry Asian markets as well as both the bulging Latin raw materials and industrial outputs.

That these are already snowballing should find us in high-gear. Already a waiting list is growing to become AP members in South America: Argentina, Brazil, Costa Rica, Panama, and MERCOSUR (the first customs union by less developed countries, including both Argentina and Brazil, but also Paraguay and Uruguay). Amid this hoopla, Canada, France, and New Zealand have also expressed interest to join the AP frolicking. Chile aggressively made its intentions known during a March 14-5, 2017 conference entitled "High level dialogue on integration initiatives in Asia Pacific: Challenges and opportunities," attended by all TPP hopefuls, as well as the country a TPP ratification would have cornered, China, not to mention Colombia and South Korea. Observers generally expect a string of free-trade agreements to emerge out of these endeavours. Bangladesh should have been there.

We have three flanks to assiduously cultivate: nurture bilateral relations with Latin countries; accelerate extant bilateral negotiations across Southeast Asia, for example, with Malaysia, Myanmar, and Thailand, while exploring newer partners, and cultivate a FTA mindset.

Fortunately for Bangladesh, it has all its marbles out in Mexico of late, to ditto efforts being made in Brazil. These need to be translated into actual flows, of merchandise trade from here and investment flows from there. Even that would not be enough: other Latin partners need to urgently be invited on board. Both the foreign ministry and business community need to ramp up their efforts here.

Doing likewise across Southeast Asia is also vital.  Various types of bilateral negotiations have been held with Malaysia, Myanmar, Singapore, and Thailand, among others, but even when proposed to Bangladesh by others, such as Malaysia, we have shied away from free-trade agreements. True, transactions remain paltry compared to the overall, but by the time we decide to take the FTA plunge, there may not be many FTA opportunities left: either possible partners will all have filled in their trade gaps, or we will have been overtaken by others, such as our enterprising neighbour, India, whose Look East policy might make us look like a second-fiddle Southeast Asian partner.

Some of them, such as Singapore, may have investment interests, perhaps in our special economic zones. But to get them motivated and attracted, building stronger trade foundations would not hurt at all, in fact, would spur the movement.

Finally, only with free-trade interlocking with our heartbeats, mindset, and soul-stirrings can we truly "break the ice" and "make up for lost time." We have the lowest FTA counts in the entire region, give or take Nepal. Up until 2015, we had six (Nepal, three), which is peanuts compared to eight for Sri Lanka, 16 for Vietnam, 17 for Indonesia, and 17 for Pakistan, all of them still far behind the regional leaders, like India with 28, South Korea 25, Japan 24, China 23, and Malaysia and Thailand with 22 each.

The six on our count appear more tentative than tangible. One has been launched. This is the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), thus far no more than a bureaucracy headquartered in Dhaka. Another has been signed, but awaits implementation: the Trade Preferential System of the Organization of Islamic Conference, a group without much market incentives for us right now but though capable of becoming an important source of raw materials, we would have to diversify our exports to get something back from this bloc. Of the three signed FTAs being implemented, we have barely reached first-base: while the Asia-Pacific Trade Agreement and Preferential Tariff Agreement: Group of Eight Developing Countries need further consolidation, the third, the South Asia Free Trade Agreement (SAFTA), may have reached premature comatose. There is nothing to show on any of these six fronts worthy of trade expansion and job creation.

Our best bet would be to grab the various bulls by the horn. With a FTA heartbeat, mindset, and soul-stirring in place, energizing the six FTA claims would be easier, and would lubricate any Latin or Southeast Asian approach for a specific bilateral agreement. Bounties rarely characterise any competitive market but discounting them when the opportunities arise would be even more uncharacteristic.



Dr. Imtiaz A. Hussain is Professor & Head of the newly-built Department of Global Studies & Governance at Independent University, Bangladesh.

imtiaz.hussain@iub.edu.bd


 
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