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Around six and half years back, members of the World Trade Organization (WTO) met in Nairobi, the capital city of Kenya, to negotiate a series of unfinished multilateral trade agendas. Three proposed mega-regional trade deals had cast a shadow on the organisation as well as the meeting which was the 10th ministerial conference (MC10). The three deals were: The Transatlantic Trade and Investment Partnership (TTIP), the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP). Only the RCEP, the China-centric free trade deal among 10 Asia-Pacific countries, finally entered into force with effect from the first day of the current year. Neither TPP nor TTIP has made any progress in the last six years.
This year in June, the WTO is scheduled to hold its 12th ministerial conference (MC12) in Geneva. It may be a coincidence that TPP and TTIP would again return to the table though with some changes in the perspectives. Donald Trump, the former president of the United States (US) pulled his country out of the TPP in early 2017 which was initiated by his predecessor Barak Obama. Trump's withdrawal from TPP has eroded the gravity of the deal which was a US-centric mega-regional trade bloc. The other 11 members of the deal, however, have decided to continue under the leadership of Japan. So, it is renamed as Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) by slightly modifying the original TPP draft agreement. The other members are New Zealand, Australia, Brunei, Canada, Chile, Malaysia, Mexico, Singapore, Peru and Vietnam. As they keep the door open for the US to re-join the pact, it is China which submitted a formal application to join the CPTPP in September last year.
The US is, however, denied re-entry into the mega-regional trade agreement. Instead, US president Joe Biden last week in Tokyo announced the launch of the Indo-Pacific Economic Framework (IPEF). The platform includes Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. Thus, seven countries are common members of both the 13-member new framework and the CPTPP.
As the US concentrates on Asia-Pacific to counterweight Chinese economic clout in the region, the new platform primarily excludes non-Asian countries. The combined Gross Domestic Product (GDP) of the participating countries represents 40 per cent of the global GDP and about 60 per cent of the world's population is there.
Some argue that the new platform is going to replace TPP or CPTPP. Some, however, argue that IPEF is more focused on geopolitics than on trade incentives as there are no market access or tariff reduction provisions in the framework like CPTPP or RCEP. The framework has four pillars: connected economy, resilient economy, clean economy, and fair economy. The signatories of the framework are free to choose the pillars but 'they have to commit to all aspects of each pillar they join.' Though all the four pillars stress the economy, speculation is that the economic framework will ultimately 'serve security interests of the US and its allies.'
Meanwhile, Germany has already expressed its interest to revive the TTIP deal. The deal has been in hibernation since 2016. Although Trump did not pull out of the TTIP like it did in the case of TPP, differences of opinion between Washington and Brussels regarding regulatory measures forced to stop the negotiation under the mega-regional trade bloc comprising the US and the European Union (EU). A discussion has also been started under a different banner.
The revival of the mega-regional trade deals especially during the Russia-Ukraine war has some long-term implications although the primary objective of the IPEF and TTIP is to counter China's trade and economic expansion. While the revival of TTIP is still slow and uncertain, the US is pushing the IPEF more aggressively. After the formation of the Quadrilateral Security Dialogue or Quad, a grouping of Australia, India, Japan and the USA to strengthen Indo-Pacific security, the US also needs to bring more countries on board. It is, however, difficult for most of the Asia-Pacific countries to join any military-based coalition irking China. For instance, the Chinese ambassador in Dhaka last year categorically said that Bangladesh should not join the alliance which aimed against China's resurgence.
The US thus feels that an alternative and soft platform is required and now IPEF provides the platform in the name of economic cooperation. The US has already asked Bangladesh to join the platform. More discussions regarding the matter will take place the next month in Washington at a pre-scheduled meeting on economic cooperation.
Some argue that IPEF grouping is 'a revival of US attempts to create an Indo-Pacific trade bloc without lowering trade barriers seen as key to keeping jobs at home.' So far, most of the countries that that have already joined IPEF are also members of the RCEP, world's largest trade bloc, may face some challenges in near future. Again countries like India, which pulled out of RCEP at the last moment 'over concerns of Chinese dominance,' is more enthusiastic about working with the US to make the IPEF a success. India and the US have a common goal to contain the rising dominance of China in the region.
Problem is that RCEP offers more liberal opportunities to harness trade and investment among the member countries. The conditions to join the bloc are not as rigid and tough as those of the IPEF. For instance, the framework has stressed strong anti-corruption commitment which is not required in the RCEP. There are also the issues of labour standards, intellectual property (IP) protection and climate mitigation that the IPFE stresses. No such precondition is necessary to join the RCEP.
To join either IPEF or RECP, Bangladesh will have to weigh the short-term and long-term gains before taking a firm decision. The problem is that the country is yet to negotiate and join any free trade agreement, or economic partnership deal. Limited experience of the negotiation coupled with fast changing geo-political landscapes makes it difficult for the country to take a right decision. Though it would be a difficult choice, yet a carefully balanced approach will be necessary to move ahead.