Non Trade Issues Halt Trade Talks

Trade talks halted on non trade issues, Nonstatic threat comes from out of the blues.

Bangladesh and the US trade talks enters stalemate over non-trade issues. A nondisclosure agreement bars the two parties disclosing nitty-gritty of the ongoing deal(80% agreed). The press highlighted the disagreement areas on following US sanctions on other countries, restrictions on WTO's MFN clause, less import from China etc.

Earlier when the Chinese trade minister visited Bangladesh a press report claimed that China wanted similar concessions in trade if the US would get some in Bangladesh. If it is indeed true ,then it would put Bangladesh into serious trouble.

There is no doubt that we have to increase our import from the US and to retain the valuable market. But the issues brought up, if the press report is indeed true, mean the end of WTO or redrafting its core rules or inventing another WTO-like organization that will incorporate the new trade realities in this changing world.

Threat is a changing phenomenon. We do not know the exact source from where it may emanate. And threat has many aspects apart from territorial encroachment. So identifying one as foe or friend is really difficult in this world. While addressing the security issues,we have to keep in mind the shifting nature of threat in this complex world. So our security challenges may not be the same as our trading partners.

But we have to keep good relations and retain the markets in the West. As I have said earlier, losing the West favor may lead us to losing the favor of others. Even if this trade talks hits the dead end, we should not retaliate. We should maintain zero tariffs to US goods. So that in future it will give us favorable ground for talks.

As I have said repeatedly, a large part of this tariff impact can be offset through depreciation of currency, which will be difficult in future due to US policy of weakening USD. In recent week, Taka appreciated because of constant flow of USD.Just in a month USD lost 1.7% of its value. As major economies across the world lower their dependence on US treasury bond and USD, there are abundant supply of USD. The central bank did the right thing by buying USD and keeping Taka weak. Otherwise, the Bangladesh Bank has to give incentives to exporters and remitters. 2.5% incentives to remitters cost the govt Tk 70 billion per annum. This is avoided through market mechanism while checking the inflation. I highlighted the thing in the past.

In brief, since threat is an evolving phenomenon in this complex world, it is difficult to give binding commitment on security issues. At the same time, we have to keep good relations with the West. In troubling times, they and their institutions come forward for rescue. Look at the sub Saharan countries,which rely on both the West and China on investment and aid, now look up for help of western institutions amid acute macroeconomic crisis as Chinese investment is drying up. Macroeconomic policy mix and adjustment is the key to face any adverse consequences of tariff.