EMINENT economist MG Quibria, professor of economics at Morgan State University, takes up a ‘turmoil’ that he reckons is in the offing in global trade. It is that the international trade regime, covered by the complex rules and framework of the multilateral agreements and dominant countries, is seemingly set for a seismic change in the days to come—from galloping globalisation to petting protectionism. A particular focus in his presentation is placed on the rising trend of ‘deglobalisation’ in the US and its potential implications for small developing countries like Bangladesh.
The new scepticism about globalisation in the west hinges on the thesis that globalisation exposes countries to excessive economic interdependence, thus calling for countries to strive for independence rather than interdependence, limiting integration to a small circle of friendly nations at best. ‘Consequently, calls for economic self-sufficiency and the reshoring of manufacturing have grown louder, leading to a retreat from globalised trade rather than strengthening their economies’. More importantly, the world stands at a crossroads with a U-turn from the US, once the champion of globalisation, now exhibiting a more reticent and inward-looking approach. Arguably, the global landscape is increasingly shaped by geopolitical tensions and regional alliances coupled with conflicts, trade disputes, and shifting alliances, escalating trade tensions between the US and China.
By and large, these events have created an environment of uncertainty and instability, affecting global trade and investment flows. Ipso facto, it is no wonder that trade and investment flows will continue to be influenced by political factors with a focus on geo-economic fragmentation. This would possibly bedevil global economic integration and reverse the rewards achieved through globalisation.
How could Bangladesh cope with those upcoming challenges in the international arena? Happily, the country has basked in her improved exports over the past 50 years — from a trifling export base to that matching many other developing economies. However, ‘while export earnings have grown over the years, the export/GDP ratio has declined in recent years, reflecting the country’s capability to translate GDP into trade, providing a telltale sign of decreasing trade competitiveness. Though satisfactory, the export performance of Bangladesh lags far behind that of export powerhouses like Vietnam. Starting around the same level in 1995, Vietnam now exports seven times more than Bangladesh. If Bangladesh has to sustain a decent growth rate, it must maintain a steady growth rate in export earnings’.
In the emerging encounter, Bangladesh has to be competitive in exports, rather than a concession seeker, through enhancing productive capacity. But enhancing Bangladesh’s productive capacity requires some sensible steps.Ìý First, tariff levels should be down from 27 per cent to 5-6 per cent of the world average and 7 per cent of lower-middle-income countries. Allegedly, the country’s ‘high and complex’ tariff structure poses a significant barrier to export diversification. This high and complex tariff structure underscores the urgent need to rationalise the tariff system to enhance competitiveness and promote export growth. Second, the government has implemented various industrial policy instruments, notably offering exporters cash incentives in 2023. However, as these incentives conflict with WTO policies and basic principles of equity, there is a strong case for their gradual elimination. Third, the future wave of export success will hinge on the capabilities of an educated and skilled labour force, thus inviting investment in improving human capital through healthcare, nutrition, and sanitation to build a healthier, more capable population. Additionally, people need access to better, more relevant education and skills that are in demand in the labour market. Employers should have the motivation to invest in their employees’ development. In sum, enhancing the education and training of the workforce will be pivotal in driving innovation and maintaining a competitive advantage in the global market.
As far as improving market access for Bangladeshi exports is concerned, the following observations are on board. First, despite various facilities and tariff concessions from different countries, exports of Bangladesh so far have been confined to a few destinations, such as the US, EU, Canada, and India. The inability of the country to exploit markets in Southeast Asia, the Middle East, Africa, and Latin America reflects, to a significant extent, its constraint on productive capacity. Second, Bangladesh has managed to maintain strong trade relations with the US despite the heavy duties on garment exports due to several factors — strong relationships with major US brands and retailers have helped sustain demand for Bangladeshi garments; and Bangladesh has carved out a niche in specific categories of apparel with a competitive edge, such as basic clothing items. However, obtaining GSP+ from the EU would be highly beneficial, as it offers duty-free access to the EU market for more than two-thirds of their tariff lines.
‘Although in the medium and longer run, Bangladesh should be able to expand and intensify its export lines if it can improve its skills and human resources, its prospects in the short term after it graduates from its LDC status may not be that bright — it may run the risk of running into dual binds — one of productive capability and the other of market access. The former relates to the country’s capability to develop new export lines and expand existing export values. The latter refers to the loss of preferential market access and the inability to annex new markets’.
In addition to the above measures, Bangladesh can unite with other developing countries and collectively advocate for fairer and more equitable trade policies in international forums. By collaborating, they can counteract developed nations’ most damaging protectionist tendencies and build a consensus for a stable, rules-based global trading system.
In conclusion, MG Quibria apparently argues that while aggressive trade policies from the United States and its allies pose significant risks to global trade and developing economies, strategic measures could partially, if not wholly, offset them — such as diversifying trade partners, implementing domestic reforms, and advocating for fair trade. Taken with full commitment, such strategic moves could help mitigate these risks and foster economic resilience and compete effectively in the international economy as well as in Bangladesh on the heels of the ‘shift of sands.’
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Abdul Bayes, a former professor of economics and vice-chancellor, Jahangirnagar University, is now an adjunct faculty at East West University.
