Home ›› 01 Jun 2022 ›› Editorial
President Joe Biden recently announced the formation of a news economic alliance– The Indo-Pacific Economic Framework (IPEF). The alliance seeks to address issues like digital economy, clean energy transition, and supply chain resiliency. In addition to the US, the initial partners of the IPEF are Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. The members together represent 40 per cent of the world's gross domestic product. Bangladesh has been invited to join the group. It may be noted that Bangladesh was invited to join two other groups - the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). Bangladesh has the option open to join these two groups at any time.
The participants acknowledge that deepening economic engagement among them is crucial for growth, peace, and prosperity. It will focus on trade, supply chains, clean energy and infrastructure, and tax and anti-corruption. The framework will focus on four key pillars – Connected Economy (including rules on digital economy, standards on cross-border data flows and data localisation, online privacy, and use of artificial intelligence); Resilient Economy (first-of-their-kind supply chain commitments that better anticipate and prevent disruptions); Clean Economy (commitments on clean energy and decarbonisation, infrastructure that promote good-paying jobs); and Fair Economy (effective tax, anti-money laundering, anti-bribery regimes, etc.) The agreed participants will launch discussions toward future negotiations on the four pillars. Members invite participation from additional Indo-Pacific partners that share their goals
and interests.
Many of the 13 nations, including Japan, Australia and Singapore, are members of what was originally called the Trans-Pacific Partnership free trade deal, which Biden's predecessor Donald Trump withdrew the United States from in 2017. The Biden administration has been clear that the IPEF will not be a traditional free trade area agreement that involves tariff-cutting commitments. Trade experts have questioned whether the IPEF can provide meaningful incentives for participation without offering greater market access to the world's largest economy, which, in usual trade talks, has served as a carrot for Washington's bid to set tougher labour standards or boost intellectual property protection.
With the region's e-commerce sector rapidly growing, the trade pillar will focus on pursuing "high-standard rules of the road in the digital economy," including standards on cross-border data flows and restrictive data measures while addressing concerns over online privacy and unethical use of artificial intelligence.
The IPEF will also seek "first-of-their-kind supply chain commitments" that better anticipate and prevent disruptions in supply chains, after the coronavirus pandemic exposed the fragility of the global supply chain for semiconductors and other products.
Under the clean energy pillar, members will deepen cooperation on technologies and mobilize financing, including funding concessions, by supporting the development of sustainable infrastructure and by providing technical assistance.
After Donald Trump pulled the United States out of the TPP, which was seen as a counterweight to China's growing influence in the region, Japan and the other 10 remaining members moved to salvage most of the deal, which has been renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The initiative of USA came after declining US economic presence in the region became more obvious as another mega trade deal involving 15 Asia-Pacific countries, including Japan, China, South Korea, Australia and members of the Association of Southeast Asian Nations, took effect in January this year. China, meanwhile, applied to join the CPTPP last year.
The US wants Bangladesh to join the Indo-Pacific Economic Framework for Prosperity (IPEF). In a message to the media, US Embassy Spokesperson in Dhaka, Bryan Schiller said Bangladesh is an important regional partner of the US, which has been in contact with the government here about the IPEF since the partnership dialogue in March and at regular intervals in Dhaka
and Washington.
The concern should be for Bangladesh that Vietnam and some other competing countries have already joined the IPEF. This will be their third major trade pact aside from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). Bangladesh is already lagging behind the competitors, and this is another opportunity to join a trade bloc from the beginning.
The real challenge for Bangladesh is its conservative attitude about internal reforms and trade facilitation. The Bangladesh Trade and Tariff Commission, which is under the administrative control of the Ministry of Commerce hardly recommends forming FTAs with important trade partners. The only suggest establishing FTAs with small regional economies like Bhutan, Nepal, and Sri Lanka. The policymakers are unwilling to reform the tax system to face the challenge of graduating from LDC, not to speak of FTA or multilateral FTA.
Another challenge for Bangladesh is bribery and corruption. Bangladesh never officially admits the prevalence of corruption in Bangladesh. Even Bangladesh has delayed the signing of the United States – Bangladesh Trade and Investment Cooperation Forum Agreement (TICFA), mentioning the elimination of corruption. It was finally signed in 2013 without any bribery related clause. This may be considered a victory for the Bangladesh authority. Still, there is no outcome of yearly meetings between Bangladesh and the USA so far.
The group will have standards on cross-border data flows and data localisation, online privacy, and use of artificial intelligence A law titled 'Bangladesh is currently preparing the Data Protection Act to regulate the cross-border data flows and data localization. It is a matter of concern that such restrictions may negatively affect trade and productivity. Bangladesh's ICT sector infrastructure and human capital are not aligned with data localization requirements. This will be another point to consider before joining the IPEF.
The grouping has apparently been formed to face the growing influence of China in these regions through the B&R initiative, but it is a pure economic group, and China may not have a reservation if any country joins IPEF. On the other hand, Bangladesh is maintaining a balance between different
economic powers.
There is good news that The Bangladesh Foreign Trade Institute (BFTI) is very actively studying not only FTA but a comprehensive economic cooperation partnership agreement (CECPA) with India. The outcome is expected in favour of such an agreement. This will be a milestone decision of the authority for an FTA. Let us hope that Bangladesh will decide to sign CECPA with India and China to balance between the biggest trade partners and major sources of raw materials. The homework for a CECPA with India will be a learning process for the nation.
Bangladesh should join the Indo-Pacific Economic Framework (IPEF) and also should join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP). IPEF is most probably the last train for Bangladesh to join a multilateral free trade area agreement from the beginning.
The writer is a Legal Economist and adviser, Bangladesh Competition Commission
He can be contacted at mssiddiqui2035@gmail.com
