RCEP entry on Bangladesh’s horizon: A game-changer in trade

23/10/2023    433

In a significant development, Bangladesh is currently mulling over the prospect of becoming a member of the Regional Comprehensive Economic Partnership (RCEP), a 15-nation trading bloc. 

This crucial decision has garnered attention for the potential benefits to Bangladesh and the broader implications on regional and international trade dynamics. 

The Ministry of Commerce has recommended the country’s accession to the RCEP, recognizing the numerous advantages that membership could bring. 

However, it is essential to note that the final decision will only be made following the parliamentary elections scheduled for January 2024.

This development has been analyzed in a recent article by Suhasini Haidar in The Hindu. 

Haidar’s analysis shines a light on Bangladesh’s potential inclusion in RCEP, emphasizing the likely consequences of this move.

The article delves into India’s stance on this matter, particularly considering how Bangladesh’s entry into RCEP could impact regional trade dynamics.

Foreign Minister AK Abdul Momen has stated that Bangladesh adheres to the general principle of not entering into significant international agreements until after obtaining a mandate through elections. 

This underlines the careful and deliberate approach the country is taking concerning its international trade commitments.

Dhaka is currently in discussions with New Delhi on updating their Free Trade Agreements and is part of the South Asia Free Trade Agreement (SAFTA). 

However, the potential shift towards joining RCEP implies a significant change in Bangladesh’s trade dynamics. 

Membership in RCEP will enable Bangladesh to engage more extensively with major economies such as China, Japan, South Korea, Australia, and New Zealand, which could reshape its trade relationships.

RCEP is the first agreement of its kind involving some of the most substantial Asian economies. 

It currently represents 30% of global GDP and aims to eliminate a significant portion of tariffs on goods traded within the bloc over the next two decades.

India has not yet issued a statement regarding whether it will reconsider its decision to withdraw from RCEP, given Bangladesh’s interest in joining. 

However, there are concerns in India that the entry of neighboring countries like Bangladesh and Sri Lanka into RCEP could lead to heightened competition with China and other RCEP members, possibly affecting India’s trade dynamics.

Dhaka’s initiative to explore RCEP membership aligns with its aim to secure alternative trade arrangements. This move is crucial as Bangladesh is poised to graduate from the list of Least Developed Countries by November 2026, resulting in the loss of preferential access to global markets.

Bangladesh is already negotiating free trade agreements with six of the fifteen RCEP countries. Joining RCEP would simplify these processes and enhance Bangladesh’s competitiveness in the global market. 

Reports indicate that Bangladesh’s entry into RCEP could significantly increase exports, potentially amounting to $5 billion.

Bangladesh’s contemplation of RCEP membership reflects a strategic shift that could shape its trade policies and partnerships. 

It not only underscores Dhaka’s ambition to secure trade advantages but also has implications for the larger Asian trade landscape.

Source: Dhaka Tribune