Sunday, 20 June, 2021; 10:03 pm
The Trans-Pacific Partnership (TPP) is a twelve-nation trade agreement that covers around 40 per cent of the world economy. The twelve parties of TPP are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Cutting tariff and simplifying trade regulations to deepen economic ties between the signatories were the major aims of the trade agreement. Like the European Union, it could create a new single market with the current signatories. The agreement was generally seen as a counter to China’s economic might in Asia as the world’s second largest economy is particularly excluded from the signatories.
On 23 January , 2017, US President Donald Trump signed an executive order to officially withdraw the country from the TPP as there was a common concern that trade liberalisation harmed jobs in the USA and the TPP would increase competition among the workers in the signatory countries. After rolling back of the USA, the TPP is known as ‘TPP Minus One.’
The US exit from the TPP might be an end to a hope for a US pivot in Asia and weaken the US grounds in Asia. However, Australia is now leading a push to salvage the trade agreement by adding China to fill the USA’s place. Meanwhile, Japan thinks TPP without USA is a meaningless deal. Singapore, one of the biggest potential losers from TPP minus one, along with other like-minded signatories is now pushing for the ratification of TPP even without the US on board.
Indeed, the US-India-Japan cooperation is considered to be a security cooperation to tackle China. The pivot was formed to resist the Chinese rising in power in the Pacific and Indian Ocean. Contrarily, China is now trying to break the pivot and overcome its economic difficulties by re-sorting its geopolitics.
In the meantime, RCEP (Regional Comprehensive Economic Partnership) is now regarded as an alternative to TPP. RCEP is the 16-member-economic group consisting of ten members of the Association of Southeast Asian Nations (ASEAN) and six other nations including China, Japan, South Korea, India, Australia and New Zealand. The RCEP members are now contributing nearly one third of the global GDP. The RECP would be an economic bloc with a population of 3.4 billion and the expected trade volume is over $17 trillion. The future of RCEP is yet to be predicted because it still faces major obstacles as parties of the deal have no common ground over cuts on tariffs on goods and other important areas on trade including intellectual property rights. Furthermore, RCEP faces different challenges with the inclusion of India and Japan; both the nations having hostile relations with China and have no free trade agreement with each other. The Chinese inclusion will make both TPP and RCEP negotiations more difficult as both sides are more or less breaking new ground. Thus, both the deals bring the world economy into a new complex situation. Nobody knows what exactly would happen in future. It is possible that US policy could change over time on this as it has been done on other trade deals also.
The end of TPP and the rising of RCEP may create an immense opportunity for Bangladesh. Interestingly, TPP minus one would be beneficial for Bangladesh as some of its provisions are not in the country’s interest. Especially Vietnam, a signatory of the TPP and a major competitor of Bangladesh, was supposed to enjoy zero-duty benefits among the signatories including the USA which is one of the top export partners of Bangladesh. But now, things might be quite different which might be congenial for Bangladesh.
In the new world dynamics, Bangladesh, rather than heavily depending on the US, needs to secure its own multilateral architecture on vital economic and political issues for achieving common interests and advancing economic integration. In this perspective, Bangladesh needs to strengthen the focus on “Look East Policy” and remove its conservatism shell to cope with the changing reality particularly in foreign trade.
After all, the US’ TPP withdrawal does not reflect the absolute benefits of Bangladesh. It depends on upcoming trade deals or integration in the changing world dynamics. However, Bangladesh should carefully observe the developments on TPP and RECP as well as other upcoming multilateral and bilateral trade deals. Bangladesh needs to explore opportunities in all the TPP member countries to boost its trade bilaterally. Bangladeshi producers need to improve their products’ competitiveness as well as standards to compete in the world markets.
Vision-2021 is in smooth progress and this will take Bangladesh to a Middle Income Country by 2021 and a developed one by 2041. If Bangladesh graduates from Least Developed Countries by 2024, it cannot continue with a duty-free or quota-free market access for long. Bangladesh needs to find its own way to be competitive by ensuring compliances and increasing efficiency in its own ground. Against this backdrop, the trade bodies of Bangladesh need to play active roles.
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