The Trump administration has weakened the multilateral trading system by focussing on general protectionist policy
Biden’s win could stabilize the global trade system disrupted by Donald Trump’s go-it-alone approach that was in-line with his “America first” policy, said economists, trade analysts and business people.
After a nail-biting suspense, Democrat Joe Biden won the 2020 US Election and is going to enter into the White House as its 46th president.
The win matters for the American people as well as for the global economy.
Since the US is the single largest export destination for Bangladeshi goods especially clothing products, it also matters for the country.
The Trump administration has weakened the multilateral trading system and focused on general protectionist policy. As a result, it engaged in trade conflict with China.
With the change in US leadership, it is presumed that the new administration will strengthen rules based multilateral and bilateral trade systems and defuse the tensions building within the global trading system.
'Biden admin better for Bangladesh'
As a country graduating from least developed country (LDC), the Biden administration could be better for Bangladesh in terms of bilateral as well as multilateral trading system.
“After the Second World War, architecture was developed in the world trading system. Multilateral trading system was rules based and it was under the supervision of the World Trade Organization (WTO),” former World Bank, Bangladesh lead economist Dr Zahid Hussain told Dhaka Tribune.
Being elected as the US president, Donald Trump made the multilateral trade system weaker and chose to take the go-it-alone approach instead of following the rule-based trading system, said the economist.
Later, the Trump administration engaged in trade conflicts with China, which made global trade unstable.
The disruption in global trade made by Trump would be removed with the takeover of Joe Biden and the WTO will be stronger further, said Zahid.
“Since we are not an economic superpower, we have to avail trade facilities under an international agency like WTO. Hence, Joe Biden would be better for Bangladesh as he honours the multilateral trading system,” Hussain argued.
“We hope there will be stability internationally, which would bring benefits also in bilateral trade,” he added.
Meanwhile, another economist opined that there will be an opportunity for Bangladesh to renegotiate the restoration of Generalized System of Preferences (GSP) with the Biden administration.
“After the suspension of GSP in 2013 by [then] president Barack Obama, there was no development in negotiation with the Trump administration to restore the trade facilities,” Professor Mostafizur Rahman, distinguished fellow at Centre for Policy Dialogue (CPD), told Dhaka Tribune.
Under the Biden administration, there may be an opportunity for Bangladesh to restart negotiation for the withdrawal of GSP suspension, said Rahman.
The economist expressed hope that the global multilateral trading system and bilateral trading system would be favorable under the new administration.
On the other hand, the general protectionist policy emphasized by the Trump administration is not good for Bangladesh, he added.
In addition, if the rule-based trading system becomes strong it would be better for Bangladesh as an LDC graduating country as it will help to avail trade facilities such as Trade-Related Aspects of Intellectual Property Rights (TRIPS), and duty waiver in pharmaceutical products, said the economist.
However, business people opined that Bangladesh has to gain trade facilities through negotiation.
“From the previous experience, I think there will be no change in trade policies with the change in leadership,” former president of Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) Shafiul Islam Mohiuddin told Dhaka Tribune.
“We have appointed lobbyists for negotiation to restore GSP but could not gain. So, we have to gain through our negotiation,” he said.
The US government offered a free trade agreement and we have to scrutinize the benefits. On the other hand, attracting US investment can help to gain benefits as they will negotiate for their benefits, Shafiul added.
US-Bangladesh bilateral trade
Bangladesh’s trade with the United States rose to $5.91 billion during the first nine months of 2020, according to the latest US Census Bureau data.
Bangladesh imported goods worth $1.34 billion in the same period.
Meanwhile, according to the US Department of Commerce’s Office of Textiles and Apparel (Otexa) data, Bangladesh’s export earnings from the US saw a 13.32% fall to $4.10 billion during January-September period of 2020, which was $3.72 billion a year ago.
In the same period, apparel exports declined by 13.23% to $3.95 billion, which was $4.56 billion the previous year.