Since long, we have been hearing that Bangladesh is negotiating Free Trade Agreements (FTAs) with such and such countries. These countries include Sri Lanka, Turkey, Malaysia, Thailand, and also China, but ironically till now, it signed none.
What has kept Bangladesh at bay when it comes to the signing of FTAs with its trade partners is not clearly known. But the other countries, including trade partners and competitors of Bangladesh, are not sitting idle; they signed dozens of FTAs, and are now signing agreements for more free trade among their FTA partners. The Association of Southeast Asian Nations (Asean) is an example. The 10-nation Asean countries signed free trade agreement among themselves long ago; but they did not stop there, they wanted to realign further with other big economies like the USA, China and India. Very recently, the Asean countries, which include most of the South Asian countries, except Korea and Japan, decided to sign RCEP (Regional Comprehensive Economic Partnership) agreement with China, India, Japan, South Korea, New Zealand and Australia. In fact, China took the lead for signing of RCEP, ostensibly to rival another big free trade bloc, Comprehensive and Progressive Trans-Pacific Partnership, or (CPTPP) ( CPTPP is the reincarnation of Trans-Pacific Partnership or TPP which was first led and promoted by the USA, but later abandoned by President Trump). The RCEP, if signed, will represent half of the world's population and one-third of global gross domestic product (GDP).
It is indeed strange that the USA, which used to lecture on the benefits of global free trade, now finds everything bad with global free trade. However, led by the USA or not or obstructed by it or not, global trade that got the taste of free trade will not stay away from it. It is moving towards more forward-looking free trade encompassing more and more areas such services, investment, connectivity and so on. Unfortunately, a few small economies, which include Bangladesh, could not take any benefit from bilateral or regional free trade agreements. These economies are left out; big economies did not count them for making partners in free trade agreements. In some cases, these economies are also at fault. Countries like Bangladesh never seriously wanted to ink any FTA with any notable economy. Whatever trade benefits Bangladesh is now enjoying came through the World Trade Organisation (WTO) route. Bangladesh singularly does not deserve any credit for that.
Now, bilateral FTA is no more effective for reaping the full potential of free trade for a country, and as such countries are increasingly embracing more regional and comprehensive free trade agreements among themselves. In trade talks, Bangladesh starts first, but finishes last, at times does not finish at all. Vietnam, starting much later than Bangladesh, signed dozens of FTAs with its trade partners. In trade volume, it caught up Bangladesh long ago and is now moving far ahead. Would Bangladesh learn something from Vietnam in this respect? Bangladesh failed to realise that the route to free trade through WTO had stopped long ago, and now countries are re-aligning themselves, mostly for the purpose of free trade. Thailand is an example. Its economy is booming because it is globally linked with other economies. From tourism alone, Thailand earned $ 58 billion in 2017 which is almost twice the size of Bangladesh's total export. India long ago became an associated partner of the Asean, but Bangladesh did not try and did not have any special relation with this economic and trade bloc.
For Bangladesh, realigning with the small economies for trade purpose will not benefit it much. Very often we hear Bangladesh is willing to sign FTAs with Nepal, Bhutan or Sri Lanka. These are small economies, and cannot offer much to Bangladesh. Two economies are important for Bangladesh, one is India and the other is China. Bilateral FTAs with these economies will be much more beneficial to Bangladesh than having dozens of FTAs signed with the small economies. China is ready to make Bangladesh a partner in free trade, and Bangladesh should clasp the extended hands. Bangladesh is feeling some sort of complacency because of its considerable achievement in global trade over the years. But the truth is that, many countries at similar level of economic development are now much ahead of it in global trade. The way economies accross the world are realigning themselves may make things difficult for Bangladesh in the coming days. The small and left-out countries will be the worst losers in the process of realignment.
Abu Ahmed is Professor of Economics, University of Dhaka. email@example.com
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