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Salvaging after the Hong Kong disaster
Enayet Rasul

          IT is no overstatement to say that Bangladesh's immediate or direct gain from the recently held World Trade Organisation (WTO) meeting in Hong Kong has been nothing at all. This is only to say the least. Bangladesh has emerged conspicuously from the meeting as a loser. No amount of smooth talk by those who represented Bangladesh at Hong Kong that it gained quota and duty free access for 97 per cent of its present and probable export goods can quite hide the stark reality that the developed countries could exclude -- on the basis of agreement reached in Hong Kong -- its only a handful of main export products like readymade garments (RMG), leather and leather goods from duty and quota free market access by putting them in the 3.0 per cent negative list where such concessions would not apply.
Thus, Bangladesh has lost the opportunity to market advantageously the few products for which it has a good manufacturing base in the country and in exporting of which it already enjoys some competitiveness. It is of no use, at least for the time being, if a very wide range of goods under the 97 per cent categories are open to Bangladesh for exporting to the developed world under the quota free and duty free facility. Most of the goods under these 97 per cent categories are like aeroplanes or computers. Bangladesh, at present, is a net importer of these goods. There is no likelihood of its turning into an exporter of these products even in the near future. Thus, the assurance of duty-free and quota free export of such products from Bangladesh may sound nice on the face of it but is really devoid of any practical value for this country right away.
But there is also another way of looking at it. The promise of the duty free and quota free access to 97 per cent categories of goods may lie in the future provided our exporters get their acts together and start scrutinising very thoroughly the agreement that had been reached at Hong Kong. It is true that most of the 97 per cent categories of goods to be given duty free and quota free access from the least developed countries (LDCs) that include Bangladesh may not be competitively produced by them at the moment. But many of these goods probably can be competitively so produced and exported at some point of time to fully take advantage of the duty free and quota free facilities. Our exporters as well as the relevant government agencies should lose no time in obtaining texts of the agreement arrived at in Hong Kong to get clear ideas of what commodities would be included under the 97 per cent categories . There is likelihood that they will be able to identify some goods under these categories which they would be in a position to produce in the country on competitive basis for exporting and gaining under the duty free and quota free facility. The new tariff lines or the duty free and quota free access of the 97 per cent categories of goods will not become operative before 2008. Thus, Bangladeshi exporters can utilise this interim period in identifying some of these products and building up their capacities to export the same to the developed countries to make the most of the duty free and quota free offer.
Even the outlook for export of our RMG can improve provided steps are taken with no loss of time to prepare well and hard for the next round of WTO talks at Washington and Geneva. The former President of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) gave an indication after returning from Hong Kong that it may not be all gloom or doom for Bangladesh's RMG if negotiations on the side can be conducted in right earnest before the coming WTO meetings, and in the meetings directly, to squeeze out maximum possible concessions for our RMG products. According to him, the US may adopt either of the 10-digit approach or the 8-digit approach in selecting which of the RMG products from Bangladesh are to be kept in its negative list. If it adopts the 10-digit approach, then 50 or 60 major RMG items may come under the quota free and duty free concession and Bangladesh presently has good capacity for producing and exporting competitively some of them. If the 8-digit approach is adopted, then the number of duty free and quota free RMG products for export from Bangladesh will be reduced to a great extent. Thus, the ones who are concerned in Bangladesh should start intense lobbying immediately so that the US authorities can be persuaded to go for the 10-digit approach.
The former BGMEA President also underlined that Bangladeshi RMG products can continue to be competitive even without the quota free and duty free market access provided government takes urgent actions to cut lead time and costs of production for the sector. The lead time can be much shortened by improving conditions at Chittagong port. The current handling time of outwards bound cargoes need to be decreased from about 4 or 5 days to 24 hours or so. Preferential consumption charges for electricity, plus round the clock reliable supply of electricity to RMG industries will also improve lead time and cut costs of production. Bank and port charges can be similarly reduced to further cut costs of production and, thus, add to competitiveness. All of these things and more are within the powers or abilities of the government to do and ought to be done in support of the main export item of the country.
Greater diplomatic activities are also necessary to mobilise enough support for Bangladesh to get the quota free and duty free market access of RMG products in the US market. Even if the US agrees in the upcoming WTO talks to extend these facilities to Bangladesh's RMG products in the upcoming talks, the same move will need to be supported without objection by other countries such as Pakistan, Sri Lanka and India that played a negative role in this regard at the Hong Kong conference. Thus, these countries will have to brought around to agree to support Bangladesh's demand for the quota free and duty free facility in the US market. Besides, the bill which is there in the US Congress already to provide this facility to Bangladesh will require vigorous lobbying efforts on the part of the government of Bangladesh (GOB) although the BGMEA has appointed lobbyists of its own for the purpose. the BGMEA's lobbying exercise in this respect needs to be further boosted by GOB's own efforts or proactive role to this end.
The agreement at Hong Kong has provisions for the LDCs to identify their products for their inclusion under the quota free and duty free facility through follow up negotiations at or outside the two more scheduled WTO conferences to be held in 2006. Bangladesh will need to go all out to make the most of these follow up negotiations to repair the damages that arose from its poor preparations for the Hong Kong ministerial.
The coming WTO rounds will be, therefore, crucial for Bangladesh . For successfully coping with them, experts have advised providing more resource persons and support staff to the WTO cell of the commerce ministry, appointment of a full fledged secretary with expert level background to deal with WTO issues and strengthening of the country's Geneva mission in all respects.
The year 2006 will be very vital for the WTO talks. This is the year when the WTO will want to wrap up its Doha round of talks with far reaching implications for world trade. But 2006 will also be a year of transition in Bangladesh. The country is already gripped with political uncertainty of sorts with the deepening of the political crisis. The political crisis may come to a head when the next two crucial WTO meetings would be held in the new year. Bangladesh's position at these talks will suffer from a lack of direction amid the political certainty if steps are not taken from now on to put in place well thought out policies. Such policies need to be pursued in relation to the WTO issues as well as building capacities to best negotiate and represent the country before the coming WTO meetings -- and also in the meetings -- notwithstanding the political storm that could be raging at home at that time.


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