Bangladesh’s expectations from the Biden government

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As the globe awaits US President-elect Joe Biden's formal inauguration in January 2021, discussions on the implications of his domestic and international policies are mounting. In Bangladesh also, there are plenty of predictions. Needless to say, expecting any Bangladesh certain measure is somewhat far-fetched. Bangladesh is usually unlikely to end up being on the radar of the new US administration as it has recently a crowded agenda to fulfill. However, a number of global policies, which may be handled differently by the Biden administration, could have implications for Bangladesh.

The first one may be the decision on the Generalised System of Preference (GSP), under which countries are granted duty free access to the exporting country. GSP is the major and oldest US trade preference program that promotes economic production of countries through elimination of duties on various products. This as well aims to supply opportunities for many of the world's poorest countries to work with trade to grow their economies and emerge from poverty.

Out of this perspective, Bangladesh is a well-deserved applicant for the US GSP facility. Bangladesh is currently a lower middle-income country by the Community Bank's category and a least designed country (LDC) based on the United Nation's classification. It'll graduate from the LDC category by 2024 with a grace period of three extra years. After 2027, Bangladesh will cease to take pleasure from the privileges offered to the LDCs. Hence, trade choices will be extremely beneficial for Bangladesh to get ready for a soft graduation. Because the US is the greatest export destination of Bangladesh, such facilities will be quite valuable for Bangladesh. At present, the European Union provides GSP center to Bangladesh's export under its "Everything But Hands" initiative.

Unfortunately, the US suspended GSP for Bangladesh on June 27, 2013, successful from September 1, 2013. The decision was based on labour rights and safety issues following a collapse of the Rana Plaza setting up on April 24, 2013 where several readymade garments (RMG) factories were located. Because the Rana Plaza tragedy, Bangladesh has made significant improvements towards meeting different compliance related issues in the RMG sector. Even so, Bangladesh could not generate it to the set of GSP beneficiary countries when President Barack Obama signed the Trade Preferences Extension Act of 2015. The Work, signed on June 29, 2015, authorised the GSP through December 31, 2017 and made GSP retroactive from July 31, 2013. Bangladesh's South Asian neighbours Afghanistan, Bhutan, India, Nepal, Pakistan and Sri Lanka were among the GSP beneficiaries. In June 2019, India's GSP rewards had been terminated by the US.

Of course, the US granted GSP to Bangladesh for sole significantly less than one percent of its total exports. RMG, which is Bangladesh's important export to the US, is not covered under GSP. Therefore, Bangladesh has to pay about 15.6 percent as duty for exporting RMG to the US. In 2005, at the ministerial appointment of the World Trade Organisation (WTO) in Hong Kong, the US decided to provide duty-no cost, quota-free access (DFQF) to 97 percent tariff lines. Even so, RMG was on the "three percent exclusion list" of the US. In that case in 2013, at the ninth WTO ministerial meeting in Bali, the creation package stipulated that designed countries, that have been yet to supply DFQF to the LDCs, would do consequently for more than 97 percent tariff lines before the tenth WTO ministerial meeting. Sadly, the Doha Circular discussion has gradually dropped its momentum, with main players like the US withdrawing itself from multilateral trade negotiations under the Trump administration.


In order to improve bilateral trade relations, Bangladesh signed the Trade and Investment Cooperation Framework Arrangement (TICFA) with the US, hoping that the TICFA could be a vehicle for GSP retention. Bangladesh and the US were to activate in debate on trade and labour related concerns like the GSP plan. Even so, not much progress has been made in this case also.

Meanwhile, around 2015 and 2020, Bangladesh has even more strengthened its compliances found in the RMG sector. Potential buyers have been dealing with RMG manufacturers to improve compliance. Several measures have already been undertaken through collaboration with Bangladeshi business owners, for instance, the Accord burning and Building Security, the Alliance of Bangladesh Worker Security and the Partnership for Cleaner Textile. Main compliance measures have already been undertaken to guarantee the protection of factories and staff. The labour laws of the country have already been amended and the proper to form trade unions in factories, including in the specialized financial zones, has been approved. The minimum wage of RMG personnel has been raised in an attempt to make it comparable to additional competing countries. Since compliance is not a one-off measure, this work still continues.

The other policy that will have impacts on Bangladesh may be the revival of the US-led mega trade deal, the Trans-Pacific Partnership (TPP), that was signed on October 5, 2015. This trade package was abandoned by the Trump administration in January 2017. Twelve members of the deal-the US, Canada, Japan, Chile, Peru, New Zealand, Australia, Brunei, Malaysia, Vietnam and Singapore-cover about 40 percent of global trade and one-third of the global market. TPP was the major ever trade arrangement among countries following the Uruguay Round of the WTO.

By integrating trade among themselves, TPP signatory countries expected to enhance their economic expansion and create jobs in their respective countries. It had been estimated that the TPP could develop the economies of TPP members by USD 285 billion by 2025. Among them Vietnam, Malaysia and New Zealand would have benefitted the virtually all with regards to GDP growth. Development and export of electrical equipment, textiles, engineering and machinery in Vietnam and Malaysia and transfer equipment in Japan could have been increased for this reason deal.

Bangladesh will worry of prospective trade diversion as a result of TPP. Through considerable tariff elimination between themselves, the TPP countries will have an advantage over non-TPP countries. RMG exports happen to be feared to end up being the direct victims of this. With TPP set up, Vietnam could have greater inclination in the US market in comparison to Bangladesh. This is especially true for different export items of Bangladesh, such as frozen food and agricultural products.

Another area of loss is going to be foreign investment. For investors, it'll be profitable to invest in TPP member countries, given that they can possess preferential usage of export items to these countries. For instance, if investors wished to spend money on pharmaceuticals in Bangladesh to export to the global industry, they'll not find it attractive to invest.

Two the areas where Bangladesh expects US leadership and commitment is investment in vaccine innovation and its availability for overcoming the Covid-19 pandemic, and a go back to the Paris Climate Arrangement. To regulate the outbreak of the pandemic successfully, Bangladeshi people need usage of vaccines cost free. Incoming President Biden possesses announced his arrange for dealing with the pandemic. Hopefully, something good should come out of his commitments. In the same tune, US determination towards the Paris Arrangement is essential for climate vulnerable countries such as for example Bangladesh.

On the whole, targets from the Biden federal government are high, but only period can tell what lengths they'll be materialised. Clearly, Bangladesh does not have any reason to expect an excessive amount of since policies are not used isolation-they are taken keeping in mind the global geo-political equilibrium.

Source: https://www.thedailystar.net

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