The current year, 2017, marks the 200th anniversary of David Ricardo's Theory of Comparative Advantage. It was in April in 1817 when the classical economist Ricardo's book titled Principles of Political Economy and Taxation was published. The seventh chapter of the book dealt with comparative cost which later was dubbed comparative advantage theory of international trade. The basic issue of the theory is that trade between countries is influenced by relative costs of production and differences in internal price structures that could maximise the comparative advantages of trading countries. 200 years later, it is still considered one of the most important theories to analyse multilateral free trade which is now quite diverse and also complex in nature.
But multilateral free trade regime is now at stake mainly due to rise in protectionist stance in many developed countries of the world. US President Donald Trump has emerged as the staunchest opponent of the free trade and multilateralism.
His provocation against free trade is driving many others to be more cautious about multilateral trade. Such move has put the future of the World Trade Organisation (WTO) into uncertainty. The body is designated to design and implement multilateral trade rules through continuous negotiations among member countries.
In less than three months, the ministerial conference of the WTO is scheduled to be held on December 10-13 in the Argentine capital, Buenos Aires. It will be the 11th ministerial conference (MC11). The highest decision making body of the global trade organisation will meet for the first time in South America.
ISSUES ON TABLE: In the last ministerial meeting, the US along with European Union (EU) made it clear that they were no more interested to continue the prolonged Doha Round negotiation. Initiated in 2001, the members are yet to reach consensus on critical issues like agricultural trade and industrial goods.
The basic idea of Doha Round was to formulate a new set of global trade rules for agriculture, industry and service sectors. But sharp differences among the member countries virtually stalled the negotiation. Some progress, however, has been made during 2013-2015-- one being the enforcement of the Trade Facilitation Agreement (TFA).
While some of the Doha issues will come under intense negotiation in Buenos Aires, some new issues will also be there. Already member countries are divided on new and old issues.
Developed countries are pursuing new issues like e-commerce, Micro, Small and Medium Enterprises (MSMEs) and investment facilitation while developing countries are opposing this. They are mostly pushing for traditional issues like farm subsidy.
Developing countries, led by India and Indonesia, are for permanent solution on public stockholding of food security. In the Bali ministerial, it was decided that the so-called 'peace clause' would be there for four years.
It is basically a temporary arrangement that a member country will not bring another member country into dispute settlement system for providing subsidy beyond the permissible level for food security purpose.
BANGLADESH POSITION: Though Bangladesh is a tiny player in the global platform, it has no option but to put some hectic efforts to keep the interests of the country alive in the negotiations. This is a daunting task and requires consistent coordination and cooperation with other countries.
During the last ministerial meeting in Nairobi in 2015, Bangladesh was the coordinator of the group of the Least Developed Countries (LDCs). This year Cambodia is entrusted with the responsibility. But being the most robust economy among the LDCs, it is becoming gradually challenging for Bangladesh to maintain smooth coordination with the other countries, especially the African LDCs. Already classified as lower-middle income country, it is aspiring to graduate from the LDC status within a decade. Thus, Bangladesh's interest on the multilateral trade negotiation is no longer confined to LDCs issues. The country needs to think beyond LDC perspective in view of its own position in post-LDC stage when existing preferences will be eroded significantly. At the same time, there is no way to compromise the common or shared interests of the LDCs or being indifferent to unity of the group.
In a recent workshop, organised by the Centre for Policy Dialogue (CPD) in Dhaka, exporters suggested some steps for Bangladesh to be on track in the upcoming ministerial negotiation. They underscored the need for more informed understanding of Bangladesh's key interests as well as the importance of adequate preparation in order to be actively involved in both agenda building and negotiations. They also suggested that Bangladesh should focus on strategic coalition building and actively engage in increasing the role of trade in her economic development.
In fact, Bangladesh needs to keep pressure on developed countries for ensuring 100 per cent duty-free, quota-free (DFQF) market access. Moreover, it also needs to push for implementing the relaxed rules of origin agreed in the Nairobi Ministerial two years back. Without relaxed rules of origin, 100 per cent DFQF would not be meaningful.
Regarding DFQF market access, Bangladesh has some differences of opinion with the African LDCs. These countries have already been enjoying tariff-free access into the US market while Bangladesh along with Nepal and Cambodia are the only LDCs who are yet to get such treatment. Regarding the permanent solution on public stockholding for food security, Bangladesh has no direct interest. But implication of a solution may be helpful in the long run. Thus it may be better to keep alliance with G-33.
Regarding new issues like e-commerce and MSMEs, Bangladesh may keep strong alliance with other LDCs and push for keeping the LDCs out of the any binding decision for a time frame of 10 years, at the very least. It is critical as LDCs and developing countries are yet to be prepared to abide by multilateral trade rules on e-commerce and MSMEs. In a similar vein, investment facilitation is not an issue for Bangladesh at this moment.
It is important to note that developing countries are also divided on new issues. For instance, countries like China and Pakistan are in favour of e-commerce. These countries, along with Argentina and Brazil, are also supporting an investment facilitation deal under the WTO framework. But developing countries like India, Indonesia, Uganda and South Africa are opposing all these new issues.
So, one thing is clear now. The Buenos Aires meet will be the most contentious ministerial of the WTO in recent years. Bangladesh needs to prepare itself accordingly.
