Bangladesh government should tread carefully when negotiating Trade and Investment Framework Agreement (TIFA) with USA

January 27, 2009

Oxfam GB, an international non-governmental organisation, puts forward its analysis along with recommendations regarding the proposed Trade and Investment Framework Agreement between the People’s Republic of Bangladesh and the United States of America

IF NEGOTIATED without hampering the country’s economic interests, different bilateral, bi-regional and regional trade and investment agreements could enhance the welfare of developing and least developed countries. However, evidences suggest that many of the trade and investment agreements are not in favour of the interests of developing and least developed countries and, more importantly, space and opportunities for least developed countries, provided by developed countries, in terms of negotiation have always been bare minimum. Henceforth, it is imperative to take appropriate measures before signing any trade and investment agreement and, as an LDC, Bangladesh needs to critically analyse the agreement to protect her interest.
   

In between 2003 and 2005, there were three rounds of trade negotiations between Bangladesh and the United States of America in relation to finalising the clauses of the ‘Trade and Investment Framework Agreement’. Since 2005 no negotiation took place between these two parties on the agreement but in 2007, during the caretaker government’s tenure, the US requested Bangladesh to re-examine the prospect of resuming negotiations on the framework agreement which resulted in no specific outcome. Oxfam in Bangladesh has examined the clauses of the draft text of the proposed framework agreement along with some existing similar agreements between the US and other countries. Subsequently, several concerns have come up after the initial examination that might have adverse effect on Bangladesh’s trade interests and would not serve Bangladesh’s purpose.
   

Paragraph 14 of the preamble of the draft text takes into account the needs for elimination of non-tariff barriers in order to facilitate greater access to the markets of both countries. Although it would be beneficial for Bangladesh if the US eliminates its existing non-tariff barriers on products and services from Bangladesh, reciprocal elimination by Bangladesh may not serve her interests. Considering the special development, trade and financial needs, Bangladesh must be given the mandate to impose non-tariff barriers to protect its nascent industries from the competition with industries of a developed country. Moreover, as a least developed country, Bangladesh also needs the recognition to protect her industries through applying tariff whereas the US should provide 100 per cent duty-free quota-free market access to Bangladesh considering the spirit of agreed framework in multilateral negotiations. Consequently, there should not be any reciprocity in eliminating trade barriers between under the agreement as development statuses of these two countries are not similar to have a reciprocal arrangement.
   

Paragraph 15 of the preamble recognises the importance of providing adequate and effective protection and enforcement of intellectual property rights (obligations contained in the Agreement on Trade-Related Aspects of Intellectual Property Rights and other intellectual property rights conventions). However, it could be noted that Bangladesh and other least developed countries have been provided a waiver until July 1, 2013 to provide protection for trademarks, copyright, patents and other intellectual property under the WTO and do not have to provide patent protection for pharmaceuticals until 2016. However, if the framework agreement is signed in its present form, Bangladesh might be pressured to pass intellectual property laws and enforce them, which would create extra burden on different domestic industries that are dependent on copying different intellectual properties at their early stage of operation. Pharmaceutical industry in Bangladesh is one such industry that is growing and increasingly exporting due to the waiver under the WTO agreement. In contrast, there is a strong lobby group of pharmaceutical industries in the US that lobby to ensure the establishment of intellectual property rights regimes in different countries. Consequently, having an intellectual property clause in the agreement could go against the interest of Bangladesh as the country has different interests than the US. For instance, as most of the computer users in Bangladesh are dependent on using software that are not patented due to high cost of licensed software, the intellectual property rights clause would adversely affect computer users in Bangladesh.
   

Paragraph 16 of the preamble recognises the importance of providing adequate and effective protection and enforcement of worker rights in accordance with each nation’s own labour laws and of improving the observance of internationally recognised core labour standards. Although workers’ right is very important, its inclusion in the agreement should not create an opportunity for the US to convince Bangladesh in introducing labour standards in line with those of the US for the purposes of protecting US domestic industries. In this regard, Bangladesh should stick to the domestic labour laws and standards along with the standards mentioned in the convention of International Labour Organisation rather than any suggested labour standards for protectionist purposes. Simultaneously, under this agreement, a programme to improve working conditions and labour standards could be launched in Bangladesh through US finance so that Bangladesh can effectively protect and enforce worker rights.
   

Paragraph 17 of the preamble desires to ensure that trade and environmental policies are mutually supportive in the furtherance of sustainable development. Again, even though sustainable environmental policies are necessary, Bangladesh should cautiously look at the linkage between environment with a trade and investment agreement whether such linkage is aimed for protectionist purposes. As Bangladesh does not have similar environmental standards or policies like the US because of its early stages of development in many industrial sectors, inclusion of the aforementioned text might create an opportunity to impose so-called ‘environmental tariff’ or other trade barriers on Bangladeshi products that fall short of following environmental standards as suggested by the US. There is a fear that environmental policies might be used as an excuse by some economic sectors of the US to gain protection against competition from Bangladesh. Therefore, during negotiations, Bangladesh should emphasise on seeking cooperation to build her capacity for formulating environmental policies so that Bangladesh can effectively enforce multilateral environmental agreements.
   

The second article of the draft mentions establishing a United States-Bangladesh Council on Trade and Investment, which will be chaired by the secretary to Bangladesh commerce and the representative from office of the United States Trade Representative and composed of representatives from both countries. Articles three and four of the draft mentioned some terms of reference for the council to work on different issues. In this regard, it should be noted that the framework agreement between the US and Malaysia, the Malaysian government takes into account the role of political authority by engaging the minister for international trade and industry as the head of its delegation at that council. However, the process of establishing the joint council on trade and investment in case of the proposed agreement is not clear. Therefore, considering the importance of the agreement, the council and its work need to be accountable and transparent along with its establishment in an accountable and transparent manner engaging different stakeholders.
   

Our recommendations are as follows:
   

* Bangladesh should be inclined more towards the multilateral trading system and should increase its negotiating capacity at the multilateral negotiation forums.
   

* Bangladesh should sign any bilateral trade agreement if it is ensured that the country would get more economic benefits than it would from the multilateral system.
   

* Bangladesh should keep in mind that bilateral trade agreement must not diminish the advantages the country is entitled to under a multilateral trading system.
   

* Before signing any bilateral agreement, it should be ensured that the agreement would facilitate technology transfer, employment generation or reduction of unemployment, increased export and development.
   

* Instead of trying to get the political support from strong nations, Bangladesh should avoid all secrecies and finalise any bilateral agreement on the basis of national consensus.
   

* Instead of engaging only the commerce ministry or any single institution in negotiating trade and investment treaties, the Bangladesh government should engage the foreign ministry, other related ministries and non-governmental organisations for protecting country’s interests.
   

The analysis was sent as part of a letter to the commerce minister of Bangladesh.

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