More reasons to be suspicious of TIFA than not

Tanim Ahmed*, NewAge, February 19, 2009

So far the US has blocked Bangladesh’s attempts for increased market access there at the global trade forum and instead divided the least developed countries successfully gaining support from the African LDCs. If that is the US attitude towards Bangladesh at multilateral forums, the government should not have any hope of securing those benefits bilaterally where the US will be even more blunt and protective

THE government has been anything but forthcoming about the proposed trade and investment framework agreement with the United States. There have been a few reports on certain changes in, or certain features of, the draft agreement. That’s all. Naturally then, the ongoing discussion on the proposed agreement have, by and large, been based on either similar deals between the US and other countries or previous TIFA drafts. While the surge in media coverage of the mooted bilateral framework agreement appears to have subsided, insiders claim that the negotiation process is very much on within the relevant ministries. The proposed agreement, if signed, will ensure increased market access for Bangladeshi products in the US market, so claims the government. The benefit understandably relates to the demand for fully preferential market access in the US markets of products manufactured in Bangladesh, especially apparels.

Over the past weeks, most of the pitfalls and potholes, challenges and handicaps of bilateral agreements have been covered more or less, in one form or the other. To recap, the proposed bilateral framework could entail pressure from Washington on Dhaka to fully implement intellectual property rights, environmental and labour standards, and reciprocity in treatment of investment and liberalisation of services, which would also include utilities such as power and water supply, and to remove barriers to trade. It has also been mentioned that such a bilateral agreement between unequal parties, since it presupposes full reciprocity, will be inherently unfair to the smaller and weaker party.

Of course, none of the abovementioned will be legally binding; these, even if mentioned, would be in the preamble of the agreement. The main text of the agreement, if the previous drafts and similar agreements between the US and other countries are any indicator, would contain the legally-binding provision for the formation of a joint council for discussion on trade matters. The Bangladesh delegation on the council would be headed by the commerce secretary, suggesting circumvention of political authority.

On top of it all, many have observed that Bangladesh is unlikely to secure any concrete benefits from bilateral negotiations with the US, and that the outcome of the bilateral negotiations could potentially undermine Bangladesh’s interests and privileges it has been granted under the World Trade Organisation.

This discussion seeks to provide an idea of the US attitude as was evident in previous bilateral and multilateral negotiations. Almost all trade and investment framework agreements that the US has entered into have similar preambles and clauses. Formation of the joint council is also almost identical. The done deals also have an annexure that contains the proposed work programme or items of discussion for the joint council. These almost invariably include issues that are of aggressive interest for the US and defensive interest for Bangladesh. High on this agenda is protection of intellectual property, promotion and protection of investment, facilitation and liberalisation of trade and investment, including non-tariff barriers, regulatory issues affecting trade and investment policies, information and communication technology, and biotechnology. What this means is that the US would use the joint council to open up Bangladesh’s markets or institute certain regulations and policies that would ensure benefits for corporations of the US, Microsoft being only one of them.

But even if the previous agreements do not contain these issues and are only mentioned in the preamble, Bangladeshi negotiators should not ignore them solely because of their ‘unbinding’ nature. Declaration of the United Nations climate change conference in Bali in December 2007 should serve as a good example. This declaration, also called the Bali Roadmap, contained in its preamble that all countries should strive to cut their emissions between 25 and 40 per cent from 1990 levels by 2020 to prevent irreversible climate change. The US, along with a few other major emitters, was staunchly opposed to this.

It was the US position that it did not want to get into something that ‘prejudged’ the outcome of the negotiations. The European Union, on the other hand, insisted that the range of desired emissions were merely to act as a ‘guiding level’. Those few lines turned out to be one of the major stumbling blocks to the roadmap, and faced with staunch US opposition, swung back and forth like a pendulum, disappearing and reappearing in the preamble until it was finally taken off with a mention of the desired emission cuts as stipulated by official reports on climate change. The lesson here for Bangladesh is that a certain provision should not be ignored as being of little significance only because it is in the preamble.

Another good example of Washington’s protectionist attitude could be cited from its position regarding agricultural subsidies during the much-talked mini-ministerial in Geneva in July last year, where a select group of countries were supposedly on the verge of a breakthrough in the stalled trade negotiations under the World Trade Organisation. There, the US made an offer to cut its ceiling of farm subsidies by 70 per cent. On the surface, it actually appeared as quite a surprise then that large developing countries were not happy with that offer. What the offer actually meant was that after 70 per cent reduction on the limit the US would still be able to provide subsidies of about $14.5 billion although the previous year these amounted to only about $9.5 billion. The US government merely ensured that it had enough leverage and space and did not budge from that position.

As far as Bangladesh’s own trade interests are concerned, the US has consistently proved itself to be one of the major hurdles. In 2003, at the WTO ministerial summit in Cancun, Mexico, the US vehemently opposed Bangladesh’s meek bids to further multilateral provisions to allow temporary movement of labour under the services agreement. At that time, it was one of the top agendas of the Bangladesh delegation headed by the then commerce minister Amir Khasru Mahmud Chowdhury.

At the next WTO ministerial at Hong Kong in 2006, where the least developed countries expected to secure their long-sought zero tariff, quote-free market access to the developed countries, it was, to a large part, the US that opposed Bangladesh’s inclusion for such a privilege. When this issue was raised at a public press conference hosted by the United States Trade Representative, during the summit, and the international media caught on to the story, the Bangladeshi press corps were invited to a separate briefing at a hotel room the next day.

The deputy trade representative, currently in a more prominent role, who handled the briefing, declined to be quoted and disclosed his identity only upon the assurance of anonymity. The US trade official clarified there that the US would not provide the fully preferential market access to Bangladesh given its competitiveness. It was the US position that Bangladesh should look into moving away from its current basket of apparel items on to other tariff lines that might enjoy better treatment.

Since then the obvious US bid to isolate Bangladesh as a ‘significant manufacturer’ of apparels has been obvious in the bill that was introduced in US Congress. According to the provisions of that bill, Bangladesh would face harsher conditions than other least developed countries. Even at the multilateral level where least developed countries are being considered for fully preferential market access to markets in the developed countries, there is a separate list of adversely affected developing countries that will be provided with certain extra benefits to counter preference erosion. Bangladesh was been excluded from both lists until there was a strong objection.

But even then preferential market access for Bangladesh apparels hangs on the balance with a very strong likelihood of not securing extra benefits at all. The Obama administration, which will be predictably more protectionist than the previous Republican government, is even less likely to grant such a privilege to Bangladesh under the multilateral forum, not to mention through bilateral negotiations. So far the US has blocked Bangladesh’s attempts for increased market access there at the global trade forum and instead divided the least developed countries successfully gaining support from the African LDCs. If that is the US attitude towards Bangladesh at multilateral forums where Bangladesh at least has collective voice along with Cambodia and several other least developed countries, the government should not have any hope of securing those benefits bilaterally where the US will be even more blunt and protective.

The Sri Lankan and Pakistani experience with similar framework agreements has only been negative, to say the least. It is the contention of experts from both these countries that the framework agreement has not translated into any tangible benefits for either of them. Instead, the agreement has become a tool through which the US can pressure the respective governments for increased market access and business opportunities for US corporations and entities.

It should also be noted that neither China nor India has a similar agreement in place, although both the countries are becoming increasingly and integrally linked with the American economy. They do not need one either. And yet a large portion of their exports land up in the US. This could also be interpreted as the framework agreement is used as a market opening tool for US interests but not quite the other way round. The bilateral agreement that the government has, until recently, appeared quite eager to conclude would be used for furthering US commercial advantage. The same would not hold true for Bangladesh.

*Tanim Ahmed writes for NewAge, a leading national newspaper in Bangladesh. Contact:


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