The Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between the 10 member states of the Association of Southeast Asian Nations (ASEAN) namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam and the six Asia-Pacific states with which ASEAN has existing FTAs, namely Australia, China, India, Japan, South Korea and New Zealand.
The negotiations formally launched in November 2012 at the ASEAN Summit in Cambodia, gained further momentum following the seventh RCEP Intersessional Ministerial Meeting being held in Cambodia on March 2, 2019. And if all goes as per plan, by the end of 2019, RCEP will be a reality.
So, one might ask when so many FTAs are taking shape world over almost on a regular basis, what is so significant about RCEP? If you are a garment manufacturer from Bangladesh, RCEP is one such FTA that you should be following closely. This is because, as of things stand now, Bangladesh will not be a beneficiary of the same while most of its competitors stand the golden opportunity of making the best of opportunities that RCEP may have to offer.
Just sample this, RCEP is said to be the world’s largest economic bloc, covering nearly half of the global economy. What’s more, as per estimates by PwC, the Gross Domestic Product (GDP, PPP) of RCEP member states is likely to amount to nearly US $ 250 trillion by 2050, or a quarter of a quadrillion dollars, with the combined GDPs of China and India making up more than 75 per cent of the amount. Considering the quantum of business RCEP would offer, especially in textile and readymade garments, its implications simply cannot be overlooked.
Once effective, all the member nations of RCEP will be able to do business at zero-tariff while Bangladesh will have to pay duty on exports!
“Our current trade privilege would face further challenges if the RCEP is implemented. We have to compete in the open world. We need to enter the RCEP even if it means reforming some of our old trading policies as it is a broad organisation. We may have the chance to enter the club by fulfilling some conditions,” observed an anxious Ahsan H. Mansur, Executive Director of Policy Research Institute while speaking to a Bangladesh news daily.
The Policy Research Institute of Bangladesh (PRI) is a private, non-profit, nonpartisan research organisation dedicated to promoting a greater understanding of the Bangladesh economy, its key policy challenges, domestically, and in a rapidly integrating global marketplace. PRI is committed to undertaking and disseminating unbiased policy-oriented economic research among public policymakers, business professionals and the academic community.
It’s not only the research organisations that are worried about RCEP, some from the business community who have been able to gauge its implications, are equally concerned.
“Firstly we will face disadvantages as our competitors will enjoy duty benefits on export of yarn, fabrics and garment items among the RCEP participants. If the deal goes through, Bangladesh will be pushed to become solely a garment stitching nation as the local yarn and fabrics manufacturers will lose their competitiveness,” is what the Managing Director of Malek Spinning (a leading spinner and garment exporter) has had to maintain on the issue of CREP.
Despite the challenges that CREP might pose, policy makers seem oblivious yet as to CREP’s insinuations on Bangladesh while grappling to understand the nitty-gritty of this FTA.
“We have not taken any measures yet to be a member of the RCEP. We may launch a study soon to assess the impacts of the RCEP on Bangladesh’s global and domestic trade. If it is possible, Bangladesh may join the RCEP in the future,” underscored Additional Secretary (FTA) to the Commerce Ministry while interacting with media.
Considering the importance of RCEP in the days to come, the Government would better be prepared to face the onslaught or rather try to be a part of it.