Published: 01:12 AM, 29 November 2020

Bangladesh should join RCEP https://dailyasianage.com/news/248346/bangladesh-should-join-rcep

M S Siddiqui

Photo

Regional Comprehensive Economic Partnership (RCEP) negotiations were launched in

November 2012 between the Association of Southeast Asian Nations (ASEAN includes

Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand,

and Vietnam) and ASEAN's free trade agreement partners (Australia, China, India, Japan,

New Zealand and Republic of Korea).

On November 15, 2020, 15 countries - members of the Association of Southeast Asian

Nations (ASEAN) and five regional partners Australia, China, Japan, New Zealand and South

Korea.- signed the RCEP. It is going to be the world's largest trading bloc, larger than the EU

and the transpacific partnership agreement (TPP), minus the US, or the CPTPP or the US-

MCA. RCEP countries' trade value in 2018 was about $2800 billion, 57 per cent of which

was intra-RCEP trade. India was to be members of RCEP, but withdrew from it.

In recent years, the number of regional trading agreements (RTAs) of various types has been

on the rise. Some 305 RTAs are already in force, and the WTO has been notified about

another 496, which are being negotiated. These RTAs cover either goods or services or both.

Indeed, 157 of these RTAs are economic integration agreements (EIAs), which go beyond

trade in goods and services. The RCEP has specific provisions covering trade in goods,

including rules of origin; customs procedures and trade facilitation; sanitary and phyto-

sanitary measures; standards, technical regulations and conformity assessment procedures;

and trade remedies.

It also covers trade in services including specific provisions on financial services;

telecommunication services; and professional services, as well as the temporary movement of

natural persons. In addition, it covered the investment; intellectual property; electronic

commerce; competition; small and medium enterprises (SMEs); economic and technical

cooperation; government procurement; and legal and institutional areas including dispute

settlement.

Under RCEP, parts from any member nation would be treated equally, which might give

companies in RCEP countries an incentive to look within the trade region for

suppliers. RCEP is expected to eliminate a range of tariffs on imports within 20 years. It also

includes provisions on intellectual property, telecommunications, financial services, e-

commerce and professional services.

However, the RCEP does stand out among this large number of RTAs. As the name implies,

it is an agreement that goes beyond trade and tariff liberalisation, into cooperation in areas of

e-commerce, removal of technical barriers to trade and non-tariff barriers and setting of

common standards and various measures to promote intra-regional trade and investment. The

idea is to take advantage of comparative advantages through initiatives to promote and foster

deeper economic integration.

Bangladesh will face competition from the RCEP participating countries, including its

competitors in the apparel trade such as India, China, Vietnam, Indonesia, Myanmar and

Cambodia, have been gearing up local industries involving textile, yarn and garment to reap

the RCEP's benefits. While RCEP members will be able to do business with each other at

zero tariffs, Bangladesh will face duties on its exports.

The signing of the RCEP is a concern for Bangladesh for several reasons. First, the RCEP

includes a number of LDCs, two of which, Myanmar and Lao PDR, will be graduating in

coming years, similar to Bangladesh. Cambodia is the other LDC in the RCEP. Timor-Leste,

another graduating LDC in the region, is trying to gain ASEAN membership.

The RCEP membership will give these graduating LDCs access to a large market, on

preferential market access terms, at a time when Bangladesh will no longer be eligible to

enjoy preferential access under the LDC schemes of RCEP members such as China, Japan,

Australia, South Korea and other preference providing members.

The RCEP is expected to create a conducive environment for investment and development

value chains and production networks, countries such as China, Japan, and South Korea will

have an added incentive to invest in the RCEP member countries with a view to taking

advantage of the preferential market access offered under the regional arrangement.

Bangladesh's efforts to attract FDI from these countries could be negatively impacted because

of the RCEP.

Bangladesh never tried to join RCEP as the policy makers are still in confusion about

'feasibility' of FTA and 'loss of revenue'. Experts say the pact of the global economy's 30%

will put Bangladesh against a new challenge. Bangladesh is now having facilities as an LDC

country in China, Korea, Australia and other big markets. Vietnam will get more access to

those markets as part of the trading bloc. The country will also get a big advantage in souring

raw materials.

By joining RCEP, the LDCs in South-East Asia are strategizing to face the challenges of

LDC graduation. Second and this should be a matter of grave concern for Bangladesh, since

Vietnam, a major competitor of Bangladesh, particularly in apparels, will enjoy preferential

market access in the lucrative and expanding RCEP market, as a member of the agreement.

Vietnam has already signed bilateral FTA with the EU and is also a member of the CPTPP.

If under the new Biden administration, the US decides to join the CPTPP, Vietnam's

preferential market access will be guaranteed in almost all major markets, at a time when

Bangladesh will lose preferential access in these markets following its LDC graduation.

Bangladesh's competitiveness scenario vis-a-vis Vietnam will undergo radical changes in

view of these developments.

Bangladesh should give due consideration to the issue of deepening ties with the ASEAN and

the RCEP, as a strategy in going forward. It may try to expedite the Bay of Bengal Initiative

for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)-FTA, negotiation of

which has recently been completed.

The framework agreement for the BIMSTEC-FTA was signed in 2004. Regrettably, it has

taken 16 years and many rounds of discussions to complete the FTA negotiations. The

BIMSTEC-FTA was also envisaged to include services. Indeed, the BIMSTEC-FTA could

potentially hope in opening a window for Bangladesh for clear links with the ASEAN and the

RCEP.

The RCEP Agreement will enter into force 60 days after six ASEAN Member States and

three non ASEAN Member States have ratified the Agreement. If it goes through,

Bangladesh faces the prospect of becoming solely a RMG stitching nation as its yarn and

fabric manufacturers will lose their competitiveness. It should lobby to RCEP in future.

Bangladesh policy-makers should give clear message to bureaucrats and diplomats to initiate

serious dialogue with other countries and authorities of RCEP for admitting Bangladesh into

RCEP.

The writer is a legal economist.

Email: mssiddiqui2035@gmail.com