The US Ambassador in Dhaka Marcia Bernicat responding to a question at a programme said recently that Bangladeshi exports would remain ‘competitive’ in the US market, especially the RMG export, adopting the international standards on workers’ safety and rights. She hoped Bangladesh might one day qualify for the TPP. “I think that’s an excellent topic for the upcoming TICFA (Trade and Investment Cooperation Forum Agreement),” she added. The US has negotiated with Australia, Brunei Darussalm, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam to sign the Trans-Pacific Partnership (TPP) deal. The TPP is a comprehensive agreement that will open markets, set high-standard trade rules and address 21st-century issues in the global economy. In doing so, it will promote jobs and growth in the US and across the Asia-Pacific region. There is a perception that Bangladesh will lose its competitive edge in apparel trade under TPP deal. At present, Bangladesh’s garments exports to the US are subject to 15.62 per cent customs duty, whereas such duty is 8.38 per cent. After the signing of TPP garment exports from Vietnam will enter the American market without any such duty. On the issue of US resuming generalised system of preferences (GSP) to Bangladesh, Bernicat said there were areas that required more work. Despite the GSP suspension, she said, US imports from Bangladesh had grown consistently as GSP covers less than 1.0 per cent of total export.
TPP aims to set the rules for 21st century trade and investment and press China, not among the 12 member countries, to shape its behaviour in commerce, investment and business regulation to TPP standards. It is a broad agreement to lower trade barriers and increase investment protections in a region comprising 40 per cent of the global economy. It will reduce overtime thousands of small and large tariff and non-tariff barriers on trade between the group, from Japanese auto parts to the US market, Australian drugs to Peru, US rice to Japan and New Zealand cheese to Canada. It also allows garment exporters like Vietnam to use yarn and other materials from outside the TPP and still benefit from TPP country tariffs. Countries must open state procurement more to foreign competition and not give state-owned enterprises undue preference. The 12 countries agreed to resolve disputes with foreign investors before expert panels. While critics say this “investor-state dispute mechanism” will leave government vulnerable to frivolous lawsuits and extra-territorial laws. TPP will establishes 5- to 8-year patent protections for cutting-edge biologic drugs, less than the 12-year US threshold but more than Australia’s five years. The range reflects failure to bridge some differences and the willingness to allow some countries room to harmonise domestic laws with the treaty. It will set standards for the cross-border issues of commerce and financial services, including preventing governments from forcing companies to place their data storage servers in the country or demanding access to a company’s software source code. It will require the member countries to live up to labour rights and fairness standards of the International Labour Organisation, and not to weaken labour protections to attract investment. Signatories are obliged to make strong efforts in environmental protection and not to undermine protections to boost trade and investment.
The TPP accord involves significant market openings; tariff cuts on thousands of products, and pledges to protect investors across the 12 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. The agreement will establish mechanisms to handle disputes between foreign investors and governments; require governments to not discriminate between their own state companies and foreign investors in major contracts; and demand countries like Vietnam, Mexico and Malaysia improve labor standards. It will also address new issues like data trade and intellectual property that have not been covered in multilateral trade pacts of the past.
The negotiations on TPP deal in Atlanta, Georgia were a gruelling exercise. The negotiators now must sell the pact to their people and parliaments for ratification. That job may be particularly difficult in Washington, where Congress already sounds hostile and its review will come during the election season next year.
