Free trade agreements (FTAs) have been proliferating right, left, and centre. And with reason: though not the optimal way to boost trade, thwart nationalism, and create a level playing field, they have nestled well with the post-Cold War neo-liberal atmosphere. According to the World Trade Organisation's (WTO's) Secretariat, since the General Agreement on Tariffs and Trade (GATT) came into force in 1948, at least 625 regional trade agreement (RTA) notifications were reported, of which 419 were operational, more than half on both counts being notified in the 21st century alone. Just as a perspective, when the Cold War ended, in 1990, there were slightly over 100 notifications and under 50 were operational. While regional trade agreements include all free trade agreements (FTAs), RTA notifications also include customs unions (of which there are under 20). Why this sudden FTA/RTA spurt?
Among their advantages: they expand traded volumes, thereby jobs; they add a dynamism that was previously absent, motivate foreign investors to enter, reduce governmental supports, encourage a much-needed division of labour, thereby promoting efficiency, and introduce new technologies.
Key disadvantages include: they thwart domestic industries, especially inefficient ones, and in addition, encourage job outsourcing, intellectual property robbery, environmental and labour disregard, and tax transfers.
Since 1990 (a useful landmark between the end of the Cold War and the start of the neo-liberal era), the 48-member Asian Development Bank (ADB) received 220 notifications, of which 140 were signed and made operational by 2016. As the beacon of economic growth after the 1997 Asian financial crisis, there is reason why such a chequered part of the world should take such a concerted plunge in this direction (in spite of almost every country having a hostile neighbour, or at least being in close proximity to one): recovery from that financial crisis certainly put the ASEAN (Association of Southeast Asian Nations) members in such a jeopardy, this paved the road out of the quagmire; China's phenomenal growth rippled off through all the deals it was making with particularly resource-rich countries, like Australia and across Africa and Latin America, or packed with consumers, as almost all the rest of the region; Japan's recovery from its 1989 recession at a time of a severe demographic crisis also demanded particularised arrangements; when India shed its nationalistic colours through Manmohan Singh's breathtaking reforms in 1991, another huge player entered a lucrative market in an upswing mood; and, finally, the Four Tigers (Hong Kong, Singapore, South Korea, and Taiwan), each so well advanced, still had to have access to new markets to keep economically swinging.
Bangladesh missed the boat. If there is a short description of why there is a FTA deficit on our own record, it is this: either Bangladesh believed the RMG magic would go on forever, or the BNP government's nationalistic undertone became a disincentive to cultivate the one opportunity where a FTA start made the most economic sense, India.
To date, we have been associated with only six. Give or take Nepal, that is the lowest among countries that matter in the region. Our other South Asian partners have been more prolific, with India leading the pack with 28 (indeed across all of Asia, even among all Asian Development Bank members), followed by Pakistan's 18, and Sri Lanka's 9. On the other side, all our Southeast Asian neighbours do just as well: Cambodia has the fewest with 8; then, moving upwards, we have the Philippines 11, Vietnam 16, Indonesia 17, Malaysia 21, and Thailand 22. On a slightly outer concentric circle lie New Zealand with 17, Australia with 19, China with 23, and South Korea and Japan with 24 each.
Our 6 are mixed: only one is bilateral, all other plurilateral. Of those six, only three are in effect: the South Asian Free Trade Agreement (SAFTA), the Asian Pacific Trade Agreement, and the Preferential Tariff Arrangements of the Group of 8 Developing Countries. None of them make the eyes twinkle, indeed barring bureaucracy and the occasional ministerial brouhaha, none really own any FTA claim: there is so much of confidence-building measures to take or disharmony to dilute, they have simply staggered on to no one's attention. One of those six is not yet effective: another disparate group more united by tepid religion than commerce, the Organisation of Islamic Cooperation (OIC). Two others remain a work in progress: BIMSTEC (the Bay of Bengal Initiative for Multisectoral, Technological, and Economic Cooperation), and the only bilateral one we have, is paradoxically with Pakistan. Even with its headquarters in Dhaka, the BIMSTEC outfit perhaps symbolises Bangladesh's benign neglect of FTA credentials: it is a largely unknown body, just like an FTA entry in our ledger, covers too wide an agenda with too many players to catch the discerning yet, against very much like an FTA alternative to the RMG sector for us, and has to not only be sold effectively to the public, but also draw early blood to remain a public reference point, thus not at all dissimilar to a Bangladesh-India FTA fate. Negotiations with Pakistan, if not already high and dry given the bickering over our war crimes trials and rulings, are not something we could go to the bank with to propose a transaction boost.
Credit must go to the present government to try to garner a FTA face. Certainly Commerce Minister Tofail Ahmed is up and gung-ho about it. Only recently he mentioned how one is being negotiated with Malaysia, which may yet produce a positive outcome before the year is through. Against the hindsight of the topsy-turvy Malaysian migration policy vis-à-vis Bangladesh this year, and also all the domestic problems the country is facing (the corruption charge against its own prime minister, an airplane lost in thin air without any clues after three years ago, another bombed down as it flew over Ukraine, and so forth), no one will be holding their breath on this.
More promising could be one with (a) Nepal, since it resonates with the Bangladesh-Bhutan-India-Nepal project and the country's growing distemper with India; (b) Myanmar, now that it is coming out of the cold, although the Rohingya issue makes this a very steep hill to climb; (c) Sri Lanka, also on a wary relationship with India and increasingly alongside us on many different fronts; (d) Thailand, currently the idiosyncratic favourite Southeast Asian country among our travellers; and (e) perhaps Indonesia, Vietnam, or both, if for no other reason than to blunt the competitive edge brewing in each against the other.
When China offered to sign one in December 2014, our RMG export to the top RMG exporting country, China, had multiplied 24 times just under Hasina's administration, from $10 million to $240 million, opening more windows, but also adding a charge that cannot have gone unnoticed in a country with whom our future is reciprocally most intertwined, India.
Perhaps the prize FTA is with Asia's FTA leader, India, though not for that reason alone: it has emerged as our most all-weather friend when politics nestles with economics, in addition to being a huge neighbour, thereby with a large market, ample and much-needed resources, and commanding too many consumer goods in the country to be ignored (in the stores, on the highways, such as trucks, and across many satellite networks, like TATA). Most of all, though, there is a rapport between India (whether under a Modi or Manmohan administration) and Hasina's. The story is too long to tell here, but the next piece will pick up the FTA thread on India specifically.
Dr Imtiaz A Hussain is Professor, International Relations, formerly Universidad Iberoamericana, Mexico City.