Bangladesh in the multipolar world order

We witnessed the bipolar world after WW II during the cold war episode and for a short stint the unipolar world after the dismemberment of the Union of the Soviet Socialist Republic on December 31, 1991.

Now, it is a multipolar world with many actors in world drama. The uncertainty in the world economic and political spectrum was confounded by a series of events such as Covid-19, the Russian aggression in Ukraine, and the chaos galvanizing the intervention of the United States in Taiwan derailing a steady path of mutual accommodation in the global political and economic scenario.

The world expected normalcy but Russia’s invasion of Ukraine created a severe pause with disruptions of the world supply chain management; energy and food markets are in shambles and austerity measures prevail all over the world.

The economic sanctions on Russia are now a boomerang for the western world.

The embargo is not working with the impromptu bilateral trade relations; obvious examples are bilateral trade between Russia and Iran and between India and Russia.

The inclusion of Finland and Sweden in NATO and the military support of the United States and the European Union to Ukraine bring the harsh reality of military chaos to the forefront.

China already signed the accord on using the bilateral local currency settlements and currency swap arrangements with many regional countries such as Indonesia, Russia, and Vietnam.

In sum; the world is multipolar and some of the big players are losing the bait to the regional superpower.

The change in geopolitics dethroned many noble concepts of the economic integration of regional blocks and the free trade area based on the dictum of comparative cost advantages.

The concessions enjoyed by the Least Developing Countries in trade facilitation measures such as GSP or the “All but the Arm” clause are leaning towards mutual adjustments in trade deals.

It could be frustrating to Jacob Viner one of the gurus of economic integration when reviewing the outcome of trade deals among the countries of the world characterized by the level of development and structure of the economy.

The fate of the Trans-Pacific Partnership [TPP] agreement signed by the twelve Pacific Rim countries is the point of origin of this whirlwind of groupings that traces the path of how a noble venture could be a bone of contention for countries in this groupings.

Former President Donald Trump on his first day in office withdrew from the TPP agreement though his predecessor Barack Obama considered the agreement a strategic pivot to Asia. For Obama, the pact was a means to ensure that “the United States- and not the countries like China- is the one writing this century’s rules for the world economy.” With the United States on the sidelines, the remaining TPP countries forged ahead with a new version of the pact, known as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership. China applied to join the pact in September 2021 putting further pressure on the United States. The reluctance of Joe Biden in rejoining the TPP with the current provisions unleashes a set of diabolical movements in these regional groupings that Bangladesh as a marginalized country is at a stake to decide on the rightful course of action. TPP is substituted by the Regional Comprehensive Economic Partnership [RCEP] initiated by China, now a contender in the world drama, and the parallel is the Indo-Pacific Economic Framework [IPEF] by the United States initially in the embodiment of the Quadrilateral Security Dialogue [QSD], comprising the United States, India, Australia, and Japan.

Surprisingly, most of the countries in the RCEP are members of IPEF. Bangladesh is not yet a member of both the groupings but India is a member of IPEF, as an original member of four country grouping QUAD. India was on the drafting Committee of RCEP from its inception in 2011 but decided to opt out on November 15, 2019. The reluctance of India is manifested in the trade deficit of about 70 per cent with the RCEP members. However, critics believe that India’s decision not to join would give China absolute control over the biggest trading blocks in the world.

It is not befitting to describe IPEF as just a geo-political unit but the country's inclusion and the four pillars such as trade, supply chains, clean energy and decarburization, and tax and anti-corruption indicate a lot in terms of trade creation and diversion among the member countries. Indeed, IPEF is not a Free Trade Agreement like RCEP and there is a concern among the many ASEAN countries that joining the IPEF would not degrade the relationship with China. The IPEF was launched by President Joe Biden in Tokyo on May 23, 2022, and thus the marginal existence neither begets hope nor despair but is a fulcrum toward a regional economic framework. A High-Level Economic Consultations between Bangladesh and the USA in early June 2022 states “Both countries share a common vision of a free, open, inclusive, peaceful and secure Indo-Pacific region with shared prosperity for all.” The complementary nature of Bangladesh's economy is a hedge for perennial trade surplus with the United States. Bangladesh may also bargain for certain trade concessions to be competitive with competitors such as Vietnam. There are pertinent trade issues such as technical assistance in exploring the potentialities of the blue economy, improving workers' rights to freedom of association and collective bargaining, and digital trade infrastructure development that could bring positive effects in enhancing trade prerogatives and seeking certain trade concessions.

It is befitting for Bangladesh to express intentions to join and participate in IPEF at its very formative stage and play a constructive role in defining and setting the rules of engagement in maintaining the trading bonanza with the United States. Both China and the United States are two principal trade partners of Bangladesh. Bangladesh considers China an important trade and development partner, and thus we can be guided by the ASEAN countries in terms of our engagements with China. Bangladesh in the past could maintain neutrality in the diplomatic manoeuvring with the trio; the United States, China, and India. Indeed, it requires a delicate balancing act and not to be tilted on one side of the spectrum for a transitory gain.

The writer is a former Member, Directing Staff, Development and Economics Division, Bangladesh Public Administration Training Center at Savar, Dhaka. He may be contacted at mirobaidurr7@ gmail.com