The document discusses various topics related to international trade and global links for Bangladesh, including: - Bangladesh's initial trade regime focused on import substitution to encourage domestic industrialization. - The evolution of the global trade regime from a period of free trade in the 19th century to rising protectionism prior to World War 2 and the establishment of institutions like the GATT and WTO to promote trade liberalization. - Key features of the GATT/WTO system including reciprocity, non-discrimination, liberalizing trade through successive negotiation rounds, and provisions for developing countries. - Bangladesh's trade policies in the 2000s including rules/regulations, tariffs and other instruments, and relevant institutions

1. Trade and Global Links

2. Presented By:
Md. Shaifullar Rabbi
BBA & MBA (Major in THM,FBS,DU)
Coordinator & Lecturer
Dept. of Tourism & Hospitality Management
Daffodil Institute of IT(NU)

3. TRADE REGIME
System of non-tariff and tariff barriers aimed to strengthen local
producer’s competitiveness. The trade regime of Bangladesh
immediately after independence was targeted to induce import-
substituting industrialization (ISI) in the country. It reflects towards
industrial development that took place in Pakistan and India.
Such trade and industrial regimes are marked by high tariffs,
pervasive bans and quantitative restrictions on imports,
overvalued exchange rate, and dominance of public sector in
ownership and management of manufacturing units and in trade
and business.

4. The Evolution
of the Global
Trade Regime
 By the second quarter of 29th century, campaign for free
trade had begun as part of a broader effort of political
reform in British society
 In 1848, Corn Laws were cancelled in Britain. The laws had
provided high protection to agricultural products
 Between 1830s and 1870s, liberal commercial exchange
flourished and dominated economically by Great Britain
 Britain was the leading creditor country in the world. Free
trade was a key facet of British commercial policy
 Economic depression emerged after 1870 due to increasing
competition and decline in prices of exports
 Protectionist policies returned and tariffs increased.
This trend was worsened by First World War and 2nd
world war.
 Protectionist policies returned and tariffs increased.

5.  Growing nationalism until Second World War manifested (established)
in mercantilism, bilateralism, and
 Growing nationalism until Second World War manifested in
mercantilism, bilateralism, and competitive exchange rate
devaluations
 Global trade declined and broke down after 1930. World trade fell by
about two-thirds by the mid-1930s
 In 1934, Reciprocal Trade Agreements Act (RTAA) in the United
States was a revolution in US and
 In 1934, Reciprocal Trade Agreements Act (RTAA) in the United
States was a revolution in US and international trade policy
 RTAA was successful in increasing the flow of international trade
 Public opinion became increasingly more supportive of free trade
 Experience in trade liberalization would become useful after the
Second World War

6. UNDERLYING
FEATURES OF
GATT 1947 AND
WTO 1995
Under the General Agreement on Tariffs and Trade (GATT), the multilateral trade
regime was characterized by the following features:
• Reciprocity. The operating feature of the regime was reciprocity and mutual
advantage: countries agreed to liberalize trade in return for similar commitments
from other members of the regime. This arrangement meant that concessions
granted by one country were matched by concessions received—giving member
nations an incentive to increase their commitments.
• Non-discrimination. Members of the regime were not to discriminate between
trading partners—all members were given unconditional most-favored-nation
(MFN) status—or between domestic and foreign goods, services or nationals once
imported into their territories (‘national treatment’).
• Objective of freer, more predictable trade. The GATT recognized price-based
measures—that is, tariffs—as the only legitimate tool for regulating trade. It
sought to reduce and eliminate non-tariff barriers and encouraged contracting
parties to bind their tariffs to make trade more predictable. The agreement also
encouraged members to reduce tariffs through successive rounds of trade
negotiations, with the expectation that trade volumes would increase under
binding commitments.
• Special provisions for developing countries. The regime provided flexibility for
developing countries by permitting them much greater flexibility in their trade
policies.

7.  The single undertaking. Member nations agreed to negotiate and sign all
WTO agreements as part of a package deal—a ‘single undertaking’. This
meant finalizing the content of the agreements based on mutual
bargaining (reflecting relative bargaining strengths) and the concept of
‘overall reciprocity’ rather than on the value of each agreement. This
approach was seen as benefiting developing countries by including in the
final package of agreements areas that had previously been effectively
excluded (such as agriculture and textiles).
 Binding implications for domestic policies. The scope of global trade
agreements has extended into areas (such as services and intellectual
property rights) that until the creation of the WTO were in the domestic
domain, while at the same time enhancing existing disciplines to make
them more intrusive. Together these new features— extension into new
areas, more intrusiveness into domestic policy-making and the single
undertaking—extend the WTO’s influence over domestic policy-making
in areas critical to the development process.
 Compliance mechanisms. Today’s trade regime has stronger compliance
mechanisms than did the GATT. Non-compliance with agreements can
be challenged under the WTO’s integrated dispute settlement system,
and no member can block such actions. Remedial action is mandated
through compensatory trade action (retaliation) by trading partners
affected by a member’s failure to meet obligations.

8. Trade-related Policies
of Bangladesh during
the 2000s:
Rules/regulations,
Instruments and
Institutions
 Bangladesh’s external trade is regulated by a number of policies, orders
and acts which are structured under a broader liberalization framework.
The main objective of Bangladesh’s export policy is to strengthen export-
led industrialization through enhancing export, increasing productive
capacity of export-oriented industries and facilitating overall export sector
through capacity building of local industries (Export Policy 2009-12). The
import policy on the other hand, is aimed to make the import regime
compatible to the WTO, simplify the procedure to import capital
machineries and raw materials, provide facilities for technological
innovation and allow import of essential commodities on emergency 5
basis (Bangladesh Economic Review, 2010).
 The Import Policy Order 2009-2012 and the Export Policy 2009-2012
delineate export and import targets, priority sectors which need special
support, strategies to promote import-substituting, domestic market
oriented and labour intensive industries. While export and import policies
are formulated and implemented by the Ministry of Commerce; import
tariff, para-tariff and other duties, which are important instruments related
to trade policy, are determined by the Ministry of Finance. The monetary
policy focuses on inflation management and equitable growth through
adjustment of different monetary variables such as money supply, level of
interest rate and exchange rate etc.

9. Rules and
Regulations
under Different
Policies
Bangladesh’s external trade is governed by two separate policies, i.e.
Import Policy Order 2009-12 and Export Policy 2009-12. These three-
year long policies have been in operation since 2002. Before that
policies were for five years and two years in the 1990s and even for a
one year period in the 1980s. It is important to note that while import
policy is a legally binding document; export policy is not legally
binding. Nonetheless, different kinds of activities taking place at the
stages of export and import are governed by separate acts, orders and
rules. Most important of these activities are: customs valuation and
inspection, pre-shipment inspection, customs clearance and
administration, tariffs (applied and bound tariff), duty-free import items,
specific duties, MFN tariff, tariff concessions, tariff preferences, rules of
origin, other border charges and levies, advance income tax, value-
added tax (VAT) and advance trade VAT (ATV), supplementary duty
(SD), regulatory duty, import restrictions; state trading, standards and
other technical regulations, sanitary and phyto-sanitary standards,
labelling and packaging, anti-dumping, countervailing, and safeguard
measures.

10. Instruments:
T
ariffs, Para-
tariffs, Exchange
Rates and T
axes
As part of trade liberalization, Bangladesh’s tariff reforms have
taken place in three phases in consideration of the pace and
sequence of reduction of the various tariff and para-tariff
barriers (Rahman et al., 2010).1 Those reform measures included
provision for duty-free access on imported inputs, reduction in
tariff levels and number of tariff rates, streamlining and
simplification of import procedures, provision for financial
assistance to traditional exports, tax rebates on export earnings
and concessionary duties on imported capital, accelerated
depreciation allowance, and refund of excise duties imposed on
domestic raw materials and inputs, proportional income tax
rebates on export earnings.

11. Principles of
the Trading
System
The WTO agreements are lengthy and
complex because they are legal texts
covering a wide range of activities. They deal
with: agriculture, textiles and clothing,
banking, telecommunications, government
purchases, industrial standards and product
safety, food sanitation regulations, intellectual
property, and much more. But a number of
simple, fundamental principles run
throughout all of these documents. These
principles are the foundation of the
multilateral trading system.

12. Trade Without
Discrimination
1. Most-favored-nation (MFN): treating other people equally Under the
WTO agreements, countries cannot normally discriminate between their
trading partners. Grant someone a special favor (such as a lower customs
duty rate for one of their products) and you have to do the same for all
other WTO members. This principle is known as most-favored-nation
(MFN) treatment (see box). It is so important that it is the first article of
the General Agreement on Tariffs and Trade (GATT), which governs trade in
goods. MFN is also a priority in the General Agreement on Trade in Services
(GATS) (Article 2) and the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) (Article 4), although in each agreement
the principle is handled slightly differently. Together, those three agreements
cover all three main areas of trade handled by the WTO.
2. National treatment: Treating foreigners and locals equally Imported and
locally-produced goods should be treated equally — at least after the
foreign goods have entered the market. The same should apply to foreign
and domestic services, and to foreign and local trademarks, copyrights and
patents. This principle of “national treatment” (giving others the same
treatment as one’s own nationals) is also found in all the three main WTO
agreements (Article 3 of GATT, Article 17 of GATS and Article 3 of TRIPS),
although once again the principle is handled slightly differently in each of
these.

13. Export-led
Development
The Trade and Development Report 2013 (TDR13), subtitled “Adjusting to the
changing dynamics of the world economy,” cautions that a prolonged period of slow
growth in developed countries will mean continued sluggish growth in their
imports. Developing and transition economies can compensate for resulting growth
shortfalls through countercyclical macroeconomic policies for some time, the study
says. But in the longer term, policy makers will need to reconsider development
strategies that have been overly dependent on exports. Instead, the report says,
development strategies should place a greater emphasis on the role of wages and
the public sector in the development process. The TDR was released today.
Prior to the Great Recession, buoyant consumer demand in some developed
countries enabled the rapid growth of manufactured exports from industrializing
developing countries which, in turn, provided opportunities for primary commodity
exports from other developing countries. The overall expansionary – though
eventually unsustainable – nature of these developments boosted global growth. The
boom also seemed to vindicate developing and transition economies in adopting an
export-oriented growth model. However, such a model is no longer viable in the
current context of slow growth in developed economies, the report warns. To address
the prospect of a prolonged period of considerably slower export growth,
policymakers need to give greater weight to domestic demand.

14. Remittance
In Bangladesh, Remittances refers to inflows of migrants’ and short-term employee
income transfers. Remittances from more than 10 million citizens abroad are very
important for Bangladesh and along with garment exports are key source of foreign
exchange. Saudi Arabia has been the largest source of remittances, followed by UAE,
Qatar, Oman, Bahrain, Kuwait, Libya, Iraq, Singapore, Malaysia, the US and the UK.
This page provides the latest reported value for - Bangladesh Remittances - plus
previous releases, historical high and low, short-term forecast and long-term
prediction, economic calendar, survey consensus and news. Bangladesh Remittances
- actual data, historical chart and calendar of releases - was last updated on
September of 2019.
 Bangladesh received $15.5 billion in remittance last year, up more than 15 percent
year-on-year, according to the World Bank.
 “In Bangladesh, remittances showed a brisk uptick in 2018,” says the World Bank's
latest Migration and Development Brief.
 The annual receipt for Bangladesh is up from the $13.5 billion which migrant
workers sent in 2017.
 Bangladesh was the third highest recipient of remittance in South Asia in 2018,
after India and Pakistan and 11th highest recipient globally.
 India retained its position as the world's top recipient of remittances with its
diaspora sending $79 billion back home in 2018.
Last year, Bangladesh's remittance income hit an all-time high, giving a breather to
the country's ongoing foreign exchange crisis. Remittance is one of the main
drivers of the country's economic growth, accounting for 5.4 percent of the gross
domestic product in the year.

15. Foreign Direct
Investment
 A foreign direct investment (FDI) is an investment in the form of
a controlling ownership in a business in one country by an entity
based in another country. It is thus distinguished from a foreign
portfolio investment by a notion of direct control.
 The origin of the investment does not impact the definition, as an
FDI: the investment may be made either "inorganically" by buying
a company in the target country or "organically" by expanding the
operations of an existing business in that country.
 Broadly, foreign direct investment includes "mergers and
acquisitions, building new facilities, reinvesting profits earned
from overseas operations, and intra company loans". In a narrow
sense, foreign direct investment refers just to building new
facility, and a lasting management interest (10 percent or more of
voting stock) in an enterprise operating in an economy other than
that of the investor. FDI is the sum of equity capital, long-term
capital, and short-term capital as shown in the balance of
payments. FDI usually involves participation in
management, joint-venture, transfer of technology and
expertise. Stock of FDI is the net (i.e., outward FDI minus inward
FDI) cumulative FDI for any given period. Direct investment
excludes investment through purchase of shares.

16. Types of FDI
 Horizontal FDI arises when a firm duplicates its
home country-based activities at the same value
chain stage in a host country through FDI.
 Platform FDI Foreign direct investment from a
source country into a destination country for the
purpose of exporting to a third country.
 Vertical FDI takes place when a firm through FDI
moves upstream or downstream in different value
chains i.e., when firms perform value-adding
activities stage by stage in a vertical fashion in a
host country.

17. Breaking
Down Foreign
Direct
Investment
Foreign direct investments are commonly made in open
economies that offer a skilled workforce and above-average growth
prospects for the investor, as opposed to tightly regulated economies.
Foreign direct investment frequently involves more than just a capital
investment. It may include provisions of management or technology as
well. The key feature of foreign direct investment is that it establishes
either effective control of, or at least substantial influence over, the
decision-making of a foreign business.
The Bureau of Economic Analysis (BEA), which tracks expenditures by
foreign direct investors into U.S. businesses, reported total FDI into U.S.
businesses of $259.7 billion in 2017, marking a 32% decrease from the
prior year. As per usual, acquisitions made up the overwhelming
majority of new foreign direct investments into the U.S., totaling $253.2
billion. Meanwhile, greenfield investments, a type of FDI defined by the
BEA as investments to either establish a new business or to expand an
existing foreign-owned business, comprised a much lighter $6.5 billion.

18. Methods of
Foreign
Direct
Investment
Foreign direct investments can be made in a variety
of ways, including the opening of
a subsidiary or associate company in a foreign
country, acquiring a controlling interest in an existing
foreign company, or by means of a merger or joint
venture with a foreign company.
The threshold for a foreign direct investment that
establishes a controlling interest, per guidelines
established by the Organization of Economic Co-
operation and Development (OECD), is a minimum
10% ownership stake in a foreign-based company.
However, that definition is flexible, as there are
instances where effective controlling interest in a firm
can be established with less than 10% of the
company's voting shares.

19. Impact of
Foreign
Direct
Investments
Foreign direct investments and the laws governing them can be pivotal
to a company's growth strategy. In 2017, for example, U.S.-based Apple
announced a $507.1 million investment to boost its research and
development work in China, Apple's third-largest market behind the
Americas and Europe. The announced investment relayed CEO Tim
Cook's bullishness toward the Chinese market despite a 12% year-over-
year decline in Apple's Greater China revenue in the quarter preceding
the announcement. China's economy has been fueled by an influx of
FDI targeting the nation's high-tech manufacturing and services, which
according to China's Ministry of Commerce, grew 11.1% and 20.4% year
over year, respectively, in the first half of 2017. Meanwhile, relaxed FDI
regulation in India now allows 100% foreign direct investment in single-
brand retail without government approval. The regulatory decision
reportedly facilitates Apple's desire to open a physical store in the
Indian market, where the firm's iPhones have thus far only been
available through third-party physical and online retailers.

20. Thank
You