We should not rely on the uncertain decision of the US President Donald Trump. We should give up narrow idea of loss of revenue of NBR and should build capacity go for bi-lateral, regional and inter-regional trade block in order to survive in the free trade regime.

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2. 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 Rules of Origin (RoO) the members will have to
collect raw materials and intermediate products from among themselves. The RoO applied for the
member-nations of the bloc are somewhat problematic for them and it creates an opportunity of FDI
and local investment in backward linkage industries.
India is not a member of the 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 $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.
By eliminating these existing tariffs, the TPP would create significant new incentives to shift
production of goods intended for sale in the US market away from other countries and to TPP
nations, whose products would newly have duty-free access to the US.
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 get benefit by establishing capacities in Vietnam and
taking benefit from the TPP. China has already begun investing in Vietnam.
India is going to sign Free Trade Agreement (FTA) with USA and the European Union. India will be
capable of getting duty free export of garment products to both USA and the European Union
market. 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).
Bangladesh has been able to retain its edge in the sourcing world in spite of the higher tariff
(Vietnam pays 8.38% in contrast to 15.61% 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.
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, as favored by
Vietnam, it could boost its share of the growing market from 4% to 1%, while Bangladesh's share
remains almost stagnant in the 7-8% range.
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

3. competitiveness in apparel production by removing tariff rates on textile imports from Japan that
average 9.7%.
Moreover, Japan's production of textiles matches very well with the textiles and Vietnam needs for
its apparel exports to the US. Vietnam is much ahead of Bangladesh in terms of investment,
compliance and environment affairs. Vietnam is also much higher on the global competitive index, so
it might grab Bangladesh's share there.
On the other hand, 10 ASEAN's countries with Australia, China, India, Japan, South Korea and New
Zealand are trying to sign Regional Comprehensive Economic Partnership (RCEP) agreement.
These two blocks control 67% world trade. Contracting states of TPP control 40% of total trade and
contracting states of RCEP control 27% of total trade. Vietnam and India are preparing to sign free
trade agreement with the European Union. India is also trying to reach free trade agreement with the
US. 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,
Bangladesh may also lose the third and fourth largest export markets in Canada and Japan.
Bangladesh mainly exports garment products to USA and European Union market. These exporting
garment produce cover 80% of total garment exports.
Once the TPP is finalized, other countries can enter the region as TPP plus. One possible solution
could be to joint TPPA and become stakeholder of the game. Bangladesh should liberalise its tariff
structure as some other countries have the opportunity to join the TPP in the near future. The
average tariff of Bangladesh is 55 percent, which is too high for openness of the country's business.
The second option is to sign bilateral free trade agreement with the export destinations or at least
with most of them. 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% of the income of National Board of Revenue. Bangladesh authority is
hardly interested to join any free trade block and not willing to sign bilateral free trade agreement.
Bangladesh import significantly from some TPP countries such as Singapore and Japan and shall
have impact on so-called revenue income from import.
Moreover, Bangladesh will have to upgrade to a developing country by 2025 and the time is very
short to prepare for withdrawal of duty benefits on exports. Under the TPP framework, Bangladesh
will get free market access to the US, but to achieve the goal, it needs to improve standards in some
areas such as labor standard, regulation, environmental protection etc. Bangladesh needs to reform
its law and rule and improve capacity to a desired level to go for free trade agreement.
We should not rely on the uncertain decision of the US President Donald Trump. We should give up
narrow idea of loss of revenue of NBR and should build capacity go for bi-lateral, regional and inter-
regional trade block in order to survive in the free trade regime.
The writer is a legal economist