The wave of global free market crated in the 1990s is near death now. Hopes for free trade were raised by the World Trade Organisation (WTO) through the agreements struck as part of multilateral trade negotiations. Several rounds of WTO talks showed some light for free movement of goods and services, and also of labour, from least developed countries to developed ones.
The WTO has attained some success in making a long list of agreements in the past three decades. They include Agreement on Agriculture, Agreement on Application of Sanitary and Phytosanitary Measures, Agreement on Technical Barriers to Trade, Agreement on Trade Related Investment Measures, Agreement on Anti-Dumping, Agreement on Customs Valuation, Agreement on Pre-shipment Inspection, Agreement on Rules of Origin, Agreement on Import Licensing Procedures, Agreement on Subsidies and Countervailing Measures, Agreement on Safeguards, General Agreement on Trade in Services, Agreement on Trade-Related Aspects of Intellectual Property Rights, Agreement on Government Procurement, and Trade Facilitation Agreement.
But challenges started surfacing once the agreements came into force. One of the first attacks came from the United States of America (USA), which refused to implement duty-free and quota-free market access (DFQFMA) facility for the least develop countries (LDCs) and instead imposed a condition, allowing market access for 97 per cent products. The list of 97 per cent was prepared in such a manner that major exportable items of the LDCs like Bangladesh went out of the range (97 per cent) or in other words, restriction on only 3.0 per cent items seriously deprived the LDCs of benefits of duty-free market access. Various proposals were placed but issues of standards and compliance have made the negotiation complex and time-consuming.
In view of slow process of talks under multilateral platform of the WTO, negotiations for regional and bilateral trade arrangements became popular in many parts of the world. Among the regional initiatives that were signed after the inception of the WTO are ASEAN Free Trade Area (AFTA), ASEAN-Australia-New Zealand Free Trade Area (AANZFTA), Asia-Pacific Trade Agreement (APTA), Central American Integration System (SICA), Central European Free Trade Agreement (CEFTA), Common Market for Eastern and Southern Africa (COMESA), Commonwealth of Independent States Free Trade Area (CISFTA), Greater Arab Free Trade Area (GAFTA), Dominican Republic-Central America Free Trade Agreement (DR-CAFTA), East African Community (EAC), Eurasian Economic Union (EAEU), European Economic Area (EEA; European Union-Norway-Iceland-Liechtenstein), European Free Trade Association (EFTA), European Union Customs Union (EUCU; European Union-Turkey-Monaco-San Marino-Andorra), G-3 Free Trade Agreement (G-3), Gulf Cooperation Council (GCC), North American Free Trade Agreement (NAFTA), Pacific Alliance Free Trade Area (PAFTA), South Asian Free Trade Area (SAFTA), Southern African Development Community Free Trade Area (SADCFTA) and Southern Common Market (MERCOSUR).
However, most of the regional free trade agreements turned vulnerable, due to geo-political tensions. In such a context, some countries, seeking closer connectivity and increasing volume of trade with important partners, joined bilateral negotiations for free trade agreement (FTA).
Many bilateral FTAs are in operation around the world. A major advantage of it is that there are two specific partners involved so it's easy to negotiate and implement. The partners are free from barriers of geographical location, strategic alliance building and similarity of interest that often affect multilateral negotiations. Multilateral FTAs under the WTO are in doubt as it's not sure how long it will take to see their full implementation. How far these agreements can serve interests of the parties concerned is another uncertainty. Rationale for some multilateral agreements may become obsolete before they come into force.
Future of regional FTAs, too, depends on political factors the way the SAFTA loses its relevance for conflicting relations between two nuclear rivals. Brexit move has made the European Union (EU) shaky. The US views of Mexico have undermined the NAFTA. Of late, trade war between China and US has threatened some multilateral trading arrangements. Tensions involving the US and Iran, and India and Pakistan over Kashmirare are also affecting multilateral trade regime. In such circumstances, the only effective way to build stronger trade partnership is bilateral FTA.
However, Bangladesh is lagging behind in this area as it is yet to sign any bilateral FTA. After receiving a number of proposals for signing bilateral FTAs, Bangladesh is in a mode of carrying out feasibility studies for years. At a time when the country needs to increase trade and strengthen trading relations with some existing and new partners, it should not have any hesitation in joining talks for signing bilateral FTAs.
Bangladesh really needs to diversify export basket to attract different countries to join bilateral FTAs. But there is no time-bound action plan in this regard. The FTAs can also help protect Bangladesh's exports, which sometimes face anti-dumping actions.
In fact, selection of appropriate mode of agreement for building stronger trading partnership is important and the FTAs are extremely relevant today. Bangladesh needs to work out strategies to ensure a helpful trade regime for the country's export growth in the coming days. Since we've embraced an export-led economic growth, our efforts to become a developing nation soon may falter unless we can strengthen our position in international trade.
Md. Joynal Abdin is acting Secretary at Dhaka Chamber of Commerce and Industry (DCCI).