The political leadership is in right directions. We have observed sincere desire of our present Commerce Minister Mr Tofail Ahmed to sign FTA/PTA with Sri Lanka and Thailand has been slowed down by different ministries and departments. The vision of political leadership should be honored by the administration. Bangladesh has one possible solution to joint TPP and become stakeholder of the game under TPP Plus option. Bangladesh should try to join Regional Comprehensive Economic Partnership (RCEP). Bangladesh should immediately go for free trade agreement with USA and EU the largest buyers from Bangladesh. We should also immediately sign FTA with China and India, the major sources of raw materials of export products.

1. https://dailyasianage.com/news/118343/mr-commerce-minister-us-will-go-back-to-tpp
EDEN BUILDING TO STOCK EXCHANGE
Daily Asian Age, 24 April 2018
Mr Commerce Minister, US will go back to TPP
M S Siddiqui
Sad news has been announced by the spokesperson of US White House for Commerce Minister
Tofail Ahmed. President Donald Trump has told top economic advisors to look at the possibility of re-
entering a massive Pacific trade deal disclosed by White House spokesperson.
On 25 October 2015, the Daily Ittefaq reported that Commerce Minister Tofail Ahmed said the
Trans-Pacific Partnership (TPP) agreement would not affect RMG sector of Bangladesh. Again in
contrast the Minister said in the meet the press on 23rdDecember, 2016 -"I must congratulate him
(US President Trump). We'll be loser once TPP is implemented." Bangladesh is fortunate that
President Trump withdraw USA from TPP with a Presidential order on 23rd January, 2017.
Bangladesh's export trade will be affected after implementation of the TPP pact since garment
products cover 80 percent of the total exports to TPP member countries. Bangladesh may also lose
the third and fourth largest export markets in Canada and Japan. Not only Garments, export of
frozen fish, pharmaceuticals and agricultural products might be hit hard. Some imports might also
become costlier challenging for Bangladesh following the pact. The pact might take at least two
years to be implemented. Not only RMG will be affected but non-RMG exports of Bangladesh will
also be affected.
Vietnam is a member of the TPP agreement and a competitor of Bangladesh. The market share of
Vietnam would increase further at the expense of other countries like China, India, Bangladesh and
Sri Lanka. TPP can impact the entire trade supply chain of the sector. Vietnam, Peru, Malaysia,
Brunei are our export competitors in the above mentioned export markets. Bangladesh may lose this
market because to Vietnam, Peru, Malaysia, Brunei, India and Vietnam will be in better position in

2. future. Currently, Vietnam is at a comparative disadvantage in the RMG world mainly due to its
higher cost of production and greater labor cost.
The pact has easy origin facility for member countries. The "yarn forward" rule of origin requires that
textile and apparel products should be made using yarns and fabrics from a TPP country to qualify
for the benefits of the agreement.
This would ensure that non?qualifying textiles and apparel from non?TPP countries do not enjoy the
benefits reserved for TPP countries. According to the RoO, the members will have to collect raw
materials and intermediate products from among themselves. The rules of origin (RoO) applied for
the member-nations of the bloc are somewhat problematic for them as well as create an opportunity
of FDI and local investment in backward linkage industries.
By eliminating these existing tariffs, the TPP would create significant new incentives to shift
production of goods intended for sale in the U.S. market away from other countries and to TPP
nations whose products would newly have duty-free access to the United States. According to the
Vietnam Investment Review, "a new wave of foreign investments in the spinning, weaving, and
dyeing sectors has been kicked off, since investors can see the profits they can gain from the TPP."
Trade journals report that foreign manufacturers have invested more than $1 billion in Vietnam's
textile and apparel sector in anticipation of a TPP agreement.
According to Saigon Times, textile and garment manufacturers based in Japan, Hong Kong, South
Korea, Taiwan, Austria, and Australia are also setting up new production or have expanded current
production in Vietnam. Indian companies can benefit by establishing capacities in Vietnam and
taking benefit from TPP. China has already begun investing in Vietnam to benefit from TPP.
Bangladesh has been able to retain its edge in the sourcing world in spite of the higher tariff
(Vietnam pays 8.38 percent in contrast to 15.61 percent for Bangladesh) for a short transition period,
but it is expected that TPP, once it is fully implemented, will trigger some trade diversion from
Bangladesh to Vietnam.
Experts are concerned over the TPP agreement. At a Bangladesh Development Conference at
Harvard University, many international observers voiced their concern that due to tariff preferences
and technology transfers following TPP, Vietnam is likely to overtake Bangladesh as the second
largest RMG exporter in global trade by 2024. A researcher observed that if TPP adopts the flexible
rule of origin on sourcing, it could boost its share of the growing market from 4 percent to 11 percent
by taking over share of Bangladesh.
A quantitative analysis conducted at the University of Rhode Island's Department of Textiles,
Fashion Merchandising and Design, revealed that TPP would "considerably improve" Vietnam's
price competitiveness in apparel production by removing tariff rates on textile imports from Japan
that average 9.7 percent. Moreover, Japan's production of textiles matches very well with the textiles
and Vietnam needs for its apparel exports to the United States. Vietnam is much ahead of
Bangladesh in terms of investment, compliance and the environment affairs. Vietnam is also much
higher on the global competitive index, so it might grab Bangladesh's share there.
India is not member of TPP and planning to set up production plants in Vietnam to take advantage of
TPP i. e. yarn forward rule of origin. Moreover, Vietnamese government provides tax holidays,
import duty exemption, concession on land lease charges, electricity, among other things for Indian
investors. Indian government has also launched US$ 300 million line of credit for establishing
capacities in Vietnam. The flexible ROO requirements would also likely result in gains for Korea and
Japan as member of TPP, the primary suppliers of textiles to Vietnam's apparel industry.

3. Moreover, India is going to sign FTA with USA and European Union. India will be capable to get duty
free export of garments products to both USA and European Union market. European Union FTA
would benefit India over both China and Vietnam. India is also considering FTA with Australia and
Canada. India can participate in other regional FTAs including Regional Comprehensive Economic
Partnership (RCEP).
On the other hand, 10 ASEAN's countries and Australia, China, India, Japan, South Korea and New
Zealand are trying to sign Regional Comprehensive Economic Partnership (RCEP) agreement.
These two blocks control 67 percent world trade. Contracting states of TPP control 40 percent of
total trade and contracting states of RCEP control 27 percent of total trade.
Vietnam and India are preparing to sign free trade agreement with European Union. India is also
trying to reach free trade agreement with USA. Bangladesh is one of the main export nations in USA
and European Union market. By creating these blocks and providing duty-free-export facility to India
and Vietnam in USA and European Union market will make threat to Bangladesh export sector.
Because of TPP and RCEP, India is going to sign FTA with USA and European Union. India will be
capable to get duty free export of garments products to both USA and European Union market.
Bangladesh relies on customs duty and deduction of VAT and Income tax as port of entry due to
weak and corrupt taxation policy. The customs duty is about 30 percent of the "income" of National
Board of Revenue (NBR). This is the easiest method of collection of tax and has control over the
economic activities. This control over economic activities is roots of corruption.
NBR set the policy of collecting advance income tax, customs duty and VAT at sources. At present
the advance tax is about 70 percent and only rest 30 percent collected afterward with due
assessment. Bangladesh should come out of the policy of "easy earning" of tax at import stage. The
nation is suffering due to easy going practice of administration.
The Ministry of Commerce use to 'regulate' Bangladesh Tariff Commission. It has only two out puts
of their study on possible free trade proposals of either revenue of loss of government or insignificant
benefit for Bangladesh. There is a possible directed study to recommend against FTA. Their final
recommendation was always not to sign FTA. According to the Asian Development Bank, from 2000
onwards, nearly 100 new FTAs have been signed in Asia alone.
Bangladesh should bring down custom tariff of basic raw materials to zero percent and withdraw the
bond license facility so that all possible industries in the country may produce all possible goods at
competitive price and go to global market. This is not an innovative method but a widely practices
and proven method of go for global for economic development. No country in the world suffered
'revenue losses' due to customs tax liberalization rather benefited of higher revenue income.
The political leadership is in right directions. We have observed sincere desire of our present
Commerce Minister Mr Tofail Ahmed to sign FTA/PTA with Sri Lanka and Thailand has been slowed
down by different ministries and departments. The vision of political leadership should be honored by
the administration.
Bangladesh has one possible solution to joint TPP and become stakeholder of the game under TPP
Plus option. Bangladesh should try to join Regional Comprehensive Economic Partnership (RCEP).
Bangladesh should immediately go for free trade agreement with USA and EU the largest buyers
from Bangladesh. We should also immediately sign FTA with China and India, the major sources of
raw materials of export products.
The writer is a legal economist. E-mail: mssiddiqui2035@gmail.com