Bangladesh's export is mainly dependent on ready-made garments. European and American markets are the main destinations for us. As a result, the RCEP will not seem harmful to us. However, in the long run, the impact is much greater.
Thanks to the LDC status, Bangladesh is getting duty-free facility in Asian and European markets, including most of the new alliance countries. Least developed countries, including Vietnam, Indonesia and Cambodia, are also getting the same benefits. The new deal has made it easier for these countries to procure raw materials from China.
Bangladesh considers Vietnam as its main competitor in exports. But there is a broad difference in the amount of import-export between the two countries. Bangladesh's export trade is only $40 billion, compared to Vietnam's $265 billion. However, both countries are close in RMG trade.
Vietnam is ahead mainly because of exports of its heavy industry products. RMG accounts for only 24% of its total exports. Yet, it competes with Bangladesh abreast. Because of the new trade deal, there is a chance that Bangladesh will lag behind Vietnam in RMG exports.
Bangladesh, like Vietnam, has to rely on China to import RMG raw materials. But the RCEP will create new opportunities for Vietnam in the Chinese market. As a result, it will enjoy more facilities in raw materials, which will reduce its production costs. For the same reason, Bangladesh will face a risk of falling behind competitors in other sectors, including agro processing, too.
Although the RCEP does not seem to be harmful for Bangladesh at the moment due to its LDC benefits, it serves us a warning for the post-LDC period. Our competitor countries, including Vietnam, are paving their way for global trade through various agreements. Bangladesh should also think about that. It should concentrate more on various regional and bilateral free trade agreements.
Ahsan H Mansur gave his opinions to Abbas Uddin Noyon over the phone.
Ahsan H Mansur is the executive director of Policy Research Institute and chairman of Brac Bank