The Financial Express

Time to move for strategic bilateral trade deal

| Updated: October 22, 2017 13:54:02

Time to move for strategic bilateral trade deal

After the assertion of US President-elect Donald Trump that United States (US) will only make bilateral reciprocal deals, neither GSP (Generalised System of Preferences) nor multilateral trade arrangement will bring any benefit for countries like Bangladesh. In fact, the US-GSP, suspended since 2013, is absolutely meaningless for Bangladesh as around 98 per cent of its export products are outside the scope of GSP. 
Thus, the call, made by some leading economists and business leaders, to initiate fresh talks with the new team of the United States Trade Representative (USTR) to restore the GSP is not a rational one. Mr Trump clearly excludes both the GSP and the Duty-Free, Quota Free Market Access (DFQFMA) mechanism under the World Trade Organisation (WTO) from his trade agenda. 
In fact, a note of the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) has already suggested that Bangladesh should welcome Trump's move to terminate Trans-Pacific Partnership (TPP) agenda. It further added that without wasting time on GSP or WTO DFQFMA, the country should immediately take up a proactive initiative in establishing a bilateral free-trade arrangement with the US (The Financial Express, December 02, 2016).
Some economists and trade leaders, however, express their reservation on the suggestion as they find it 'too early to do so' and the country 'is not in a position' to sign any bilateral trade deal with the US 'at this moment' or even in the 'near future.' One argument in this regard is that bilateral trade deal with the US would be tied with a lot of stringent conditions like labour standard, product standard and intellectual property (IP) rights issues and 'Bangladesh is still far behind in these areas.'  
It is unfortunate that policy players of Bangladesh for some unknown reasons failed to assert for long that by excluding the country from GSP on the issue of labour standards, the US itself has violated the requirements of the International Labour Office (ILO), WTO and Trade and Investment Cooperation Framework Agreement (TICFA) with the US. 
On labour standards, Bangladesh is in compliance with the provisions of TICFA Preamble which said:  "Recognizing the importance of improving the observance and promotion of workers' rights to both countries' economic welfare; respecting, promoting and realizing in each Party's laws and practices the fundamental labour rights enumerated in the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-Up (1998); and ensuring the effective enforcement by the Parties of their respective labour laws;"..."Noting that the Parties are Members of the WTO and affirming that this Agreement is without prejudice to the rights and obligations of these Parties under the agreements, Understanding, and other instruments related to or concluded under the auspices of the WTO." Moreover, TICFA Article 5 says: "This Agreement shall be without prejudice to the law of either Party or to the rights and obligations and privileges of either Party under any other agreement." 
Thus, the US has violated the binding WTO decisions on labour standards mentioned in Paragraphs 4 and 8 of the WTO Singapore and Doha Ministerial declarations respectively. 
On labour standards, Bangladesh has ratified core ILO conventions 29, 87, 98, 150, 105, 111, and 182 under which Bangladesh accords freedom of association of employed workers, effective recognition of employed workers' right to engage in collective bargaining, elimination of child labour and elimination of discrimination in respect of employment and occupation in accordance with its own regularly updated labour laws and its specific commitments under ILO.
In BFTA negotiations with US, Bangladesh should strongly point out that it is a compliant country under the terms of ILO, WTO and TICFA, and US should keep the issue of labour standards, for imposition of trade-restrictive measures, outside the jurisdiction of mutual trade relations as mandated in the decisions on ILO core labour standards ("reject the use of labour standards…..".) adopted under Paragraphs 4 and 8 of the WTO Singapore and Doha Ministerial conferences respectively.
On product standard, TICFA Preamble says: "Taking into account the desirability of reducing non-tariff trade barriers in order to facilitate increased trade among the parties." Now,  Bangladesh has developed internationally "Accredited Quality Management and Certification" system and the quality of our export items is duly recognised in the global markets except in some occasional consignments of sensitive food items which is not very uncommon in global trade. Therefore, the country has no reason to be concerned on product standards as it has almost uninterrupted export of various Bangladesh products in the US, EU and elsewhere.
On the other hand, Bangladesh has some interest in asking US to reduce various, IPR, ILO, TBT, and SPS and also WTO plus non-tariff trade barriers in order to facilitate increased mutual trade as mandated in TICFA.
On IPR, Bangladesh is also  in compliance with the provisions of TICFA Preamble: "Recognising the importance of providing adequate and effective protection and enforcement of intellectual property rights and adherence to intellectual property norms in accordance with the World Trade Organization (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights, the Berne Convention on the Protection of Literary and the Artistic works and any other intellectual property rights related international agreements as applicable to the parties"
Bangladesh has already incorporated the IP-related multilateral conventions and treaties including the Paris Convention for the Protection of Industrial Property (March 3, 1991); Berne Convention for Protection of Literarily and Artistic Works (May 4, 1999); Universal Copyright Convention (May 05, 1975) along with relevant treaties, conventions and protocols under World Intellectual Property Organisation (WIPO). The country also complied with the respective conventions and grant IPRs as per WTO TRIPS Agreement. LDC TRIPS waiver up to July 01,  2021 is therefore no longer relevant for Bangladesh except for pharmaceutical and agricultural chemical products.
On IPR enforcement, Bangladesh is also a compliant country under the terms of   Article 41.5 of the TRIPS Agreement: "The enforcement cost shall be borne by private parties as IPR is private right in nature.........Nothing in this Part (Part III Enforcement of Intellectual Property Rights) creates any obligation with respect to the distribution of resources as between enforcement of intellectual property rights and the enforcement of law in general."
The country needs to ask the US for incentives for transfer of technology, technical and financial cooperation under the terms and obligations of the Article 66.2 and 67 of the WTO TRIPS Agreements as stipulated under TICFA.
About the prospects of TPP, leaders from some fellow TPP countries have openly questioned whether there would be any benefit in advancing a deal without the US.  According to Japanese Prime Minister Shinzo Abe, "TPP deal without the US would effectively have no meaning given the balance of trade-offs struck between the 12 countries in the negotiations."  
Bangladesh, which is going to graduate out of the list of least developed countries (LDCs) in the near future to the status of a rapidly growing developing country, has no other option but to take up proactive agenda for concluding on fast-track basis free-trade agreements with most potential trading partners like the 12 country Russia-CIS bloc, the US, the EU, post-Brexit UK leading to Commonwealth free-trade area, and join ASEAN, RCEP and establish BRICS-BIMSTEC comprehensive economic partnership without prejudice to the rights and obligations under the WTO Agreements (as in BD-US TICFA and BD-EU trade agreement).   
A national committee on Free Trade Agreement (FTA) should be formed immediately. Secretary of the Ministry of Commerce may head the committee. Representatives from the private sector, think-tanks, line ministries and agencies, including National Board of Revenue (NBR), Tariff Commission and Bangladesh Bank may be the members.
The task of the committee should be to formulate country/region-specific draft BFTAs templates highlighting the macro-policy structure and options in the light outlined above. Bangladesh must not stay behind others especially our competitors, in the global race of growing bilateral and regional trade relationships in all strategic combinations.
The writer is a Trade Policy Adviser, FBCCI. 
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