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Bangladesh Weighs Pros and Cons of Joining TPP

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Not that Bangladesh is eligible to join the Trans-Pacific Partnership (TPP), since it’s still in the dog house with the United States for its labor standards, but the Southeast Asian nation has already begun mulling the benefits and setbacks the 12-nation trade deal could bring.

A study by the Bangladesh Tariff Commission (BTC) said the country is neither in a position to join the TPP, nor does it need to do so.

Bangladesh Ministry of Commerce senior secretary Hedayetullah Al Mamoon told the Financial Express, “We have been examining all aspects. We will take a decision on joining the TPP once it appears necessary for us.”

Currently, Bangladesh has tariff-free access to most of the TPP member markets under its least developed country (LDC) status, with the exception of the U.S., which suspended its trade benefits under the Generalized System of Preferences (GSP) in June 2013 and so far has not yet deemed the country fit for reinstatement.

Australia, Canada, Japan, Singapore and New Zealand are among the TPP member countries that afford Bangladeshi products tariff-free market access, so joining the TPP would not have far-reaching benefits in that regard.

The BTC believes that joining the TPP would mean a decline in revenue from import duties because, as a member of the bloc, Bangladesh would have to reciprocate the duty breaks for partner countries.

Taking Singapore and Japan in particular—which together provided 10 percent of Bangladesh’s imports in 2015—earnings from duties could drop quite a bit. Currently, import duties account for roughly 27 percent of Bangladesh’s total revenue earnings, according to the Financial Express.

For now, the country is keeping an eye on Vietnam and the forthcoming future competition it will face from the nation expected to benefit the most from the TPP trade deal.

Both Bangladesh and Vietnam saw the biggest growth in apparel exports to the U.S. in January, with Bangladesh’s growth coming in at 11.4% to $498 million and Vietnam exporting $926 million in apparel to the U.S. in the month, a 16.5% jump.

But with Vietnam’s membership in the TPP, the country could soon give Bangladesh an even bigger run for its exports. Vietnam already pays a lower average duty on apparel destined for the U.S. than Bangladesh, and with those duties being overwhelmingly reduced or eliminated once TPP takes effect, Bangladesh will be at a further disadvantage.

All that aside, Bangladesh knows its musings about joining the TPP, at this stage, are just that.

“Right now, Bangladesh is not able to join the TPP bloc,” Centre for Policy Dialogue executive director Mustafizur Rahman told the Financial Express. “We need to improve our standards including addressing the labor issue before joining the bloc.”

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