Terms of endearment and interest

The name of the new US ambassador to Bangladesh has just been announced. Almost immediately, many of us tried to look up her background only to understand her engagement in Asia. This curiosity at our end is natural, considering that with every word of caution uttered by a diplomat in town, our hearts sink a little till we eventually muster enough courage to reconcile with our strength and declare that we are a nation that does not give in to external pressure. As a result, every time the issue of GSP suspension by the US comes up, we boldly say: “But we never even got GSP for RMG…so how does it affect us?” And every time the murder of Aminul Islam pops up in a list of US concerns, we stress on the fact that many of us did not even know Aminul Islam. Fine and fair. But at the cost of stating these facts, and at the cost of sounding bold and indifferent to the current reality, are we missing out on economic opportunities?  Is it time to realign our interests and strategies as per the need of the economic hour? If so, why?
The answer is pretty simple. East is getting more attention by the minute. According to the Asian Development Bank, the East, before the end of the century will account for half of the world’s economic output where India, China, Indonesia and Japan will be the major players. Yes…India is the largest democracy, Japan and China are the third largest economies, Indonesia hosts a large Muslim majority, and many of the armies in the Asia-Pacific are in the list of the largest in the world. Many Asian countries including China, South Korea, Singapore and even India have doubled their foreign direct investment in the United States. Therefore, instead of the Middle East, the US has been turning its focus on Asia, as a part of ‘rebalancing’ or pivoting initiative. And contrary to what we may like to believe, South Asia too is of intense interest to the US.
While the US begins to pay more attention to Asia, we also need to study a new reality where US may simply pay more attention to driving more global economic opportunities and yet exclude us. The Trans-Pacific Partnership (TPP) focuses on Free Trade Agreements with a dozen countries. Malaysia and Singapore are the prime countries for the US, but then again there are Indonesia, Philippines and Vietnam who are also part of the US’s wish list. Out of all these countries, if the TPP comes into effect with Vietnam, then we may have substantial worries on our platter, as US trade and investment with Vietnam will soar.
The US-Vietnam Bilateral Trade Agreement (BTA) has been in place since December 10, 2001. This 140-page comprehensive document, which covers trade in goods, protection of intellectual property rights, trade in services, investment protection, business facilitation and transparency took almost five years to come into effect. But once it happened, this document started to represent the commitment of both the countries to ensure fair markets to one another. As a result, Vietnamese goods were accessed lower tariffs by the US in comparison to the earlier tariff of 40%. And because the US market represents nearly a third of the world GDP, for Vietnam, it was indeed a smart move to have pledged reforms in its trade and investment climate and allow a fair access to the US companies and products in Vietnam. Vietnam has also continued to remain committed to follow international norms. As a result, the BTA is the most effective trade agreement Vietnam has signed so far.
Then there is India to consider. Apart from the risk of India signing a duty free agreement with EU, there are also other economic challenges that we may suddenly face with the US with regard to India. Ever since Biden visited India in July 2013, many have begun to invest in the possibility of India joining the Trans Pacific Partnership. India’s disconnect from the global economy is clearly visible as it continues to have only about 2.1% share in global trade. Therefore, to many, India joining TPP makes serious sense. But then again, there are economists like Jagdish Bhagwati who feel that India need not join the club by going to “church and sing hymns with the other club members.” India may still seek TPP membership…just as a strategy to counter balance China and to benefit economically.
As for the US’s side, fast tracking TPP has remained an important priority as the US feels that it has not amply invested in Asia’s economic growth to the extent that it would have liked to. So, beginning 2009, after the financial crisis, the US administration has deeply engaged with the Asean “tigers” (Singapore, Malaysia, even Vietnam); the NAFTA nations (US, Canada, Mexico); Latin American countries (Chile, Peru); Oceania (Australia, New Zealand); and East Asia (Japan, South Korea) for a de facto expanded TPP. China has so far been out of the scene though even China has shown some interest in eventual membership in TPP. Let us also remember that all these nations are well aligned with regional interests and initiatives and if the TPP deal comes through, then it would cover about 40% of the world economy!
However, last week, I was reading with intense interest and pleasure that the latest two-day meeting of the TPP members in Singapore has given no clue on when a final accord may be reached. Apparently, to our advantage, the twelve putative members of the group have remained divided on major issues. Now, why should the concept of TPP worry the Bangladeshis? Well, as far as Bangladeshis are concerned, TPP will benefit Vietnam the most. It may double Vietnam’s export to the US. While China has a 37% share of the US textile and apparel market and while Vietnam has only 8%, Vietnam would easily be able to have its current related 17% levy on apparel export to US be halved or nullified if TPP is sealed.
The point is elsewhere. The challenge lies in whether we are important enough for the US. Yes, we are. But are we going to be able to continue keeping them economically interested in us? Sure, but only if we play our diplomatic cards right. A recent observation by a US diplomat made me edgy. He said that it has taken 12 years for the US to sign Ticfa with Bangladesh whereas it had taken the Americans only 6 weeks to sign the same in Angola. Now, that is worrisome and that is exactly where we need to set our priorities right, if only, of course, we want to.
 

The writer is Managing Director, Mohammadi Group.