TICFA: The capitulation

Photo: bdnews24.com

After years of fruitless deliberations, the government has finally succumbed to internal and external imperatives to sign a Trade and Investment Cooperation Forum Agreement (TICFA) with the USA. The USA had sent the first draft of the agreement under the rubric of Trade and Investment Framework Agreement (TIFA) to the Ministry of Commerce more than a decade ago. The USA has similar innocuous-looking agreements with a host of relatively small countries. The principal purpose of these agreements is to provide a forum for regular discussions on trade and investment related issues between the United States Trade Representative (USTR) and the trade ministries of these countries.

The Ministry of Commerce which looks after trade issues of the country had decided against accepting the draft of the agreement on the ground that the text could unduly constraint Bangladesh’s policy space. That seemed to have been the position of the Ministry until recently.

The original draft of TIFA attempted to commit Bangladesh on core labour standards, environmental standards, corruption and intellectual property rights. All these issues, especially the last, were subjects of negotiations at the WTO. The developing countries were particularly wary of any attempt to link trade issues with labour and environmental standards. The Ministry, which was intensely involved in the WTO negotiations, thought it unwise to commit Bangladesh on these issues outside of the WTO.

It was also alarmed by the inclusion of corruption in the text. Transparency International had ranked Bangladesh as the most corrupt nation of the world little over a year ago (June 2001) during the fag end of the tenure of the then Awami League-led government. It was common sense that the situation was unlikely to improve much in the near term. The Ministry was understandably nervous about the implications of such a provision in TIFA for future multilateral and bilateral trade negotiations.

Since then more drafts of TIFA were considered. The USA appeared to have at one stage relented on corruption and also on environmental standards, but it remained steadfast on the other two. Labour standards were a tricky issue; the government was acutely aware of the awful state of labour relations in the industrial sector. The Tazreen fire and Rana Plaza collapse seemed to have finally broken the resolve of the government to resist on labour issues. However, the extent of capitulation in the negotiations was not known until the agreement under the new rubric TICFA was signed and the USTR published the agreement on its website (Bangladesh is yet to make it available).

The importance given to labour issues should be evident from the following statement of the USTR Ambassador Michael Froman after signing of the agreement: “Importantly, we’ll also be able to track and discuss Bangladeshi efforts to improve worker safety and worker rights. This is an important priority for the United States as Bangladesh seeks to prevent more tragedies in its ready-made garment sector.” (http://www.ustr.gov/about-us/press-office/press-releases/2013/November/US-Bangladesh-TICFA-Signing)  Bangladesh may expect to answer some tough questions on worker rights and safety issues in the meetings of the Forum. The negotiating skills of the Ministry of Commerce officials will be severely tested when they face the formidable trade negotiators from the USA armed with TICFA clauses.

All the major issues that were in the first draft of TIFA appear to have been revived and included in TICFA. Not only that the objections raised by Ministry officials and civil society experts during the last eleven years on labour and environmental standards and IPR have been overridden, the government even agreed on the inclusion of corruption in the agreement. If these were done conscientiously with the best interest of trade and investment of the country in mind there would not be much to object. However, there is a nagging suspicion that it was done more to appease an irate USA than to protect the legitimate interests of Bangladesh.  Much has been written on this matter in the media.

The AL-led government has picked up an unwarranted quarrel with the USA over its blatant mistreatment of Dr. Yunus and Grameen Bank. The USA made its position on this matter very explicit and public. Several high level emissaries, including the Secretary of State, tried to persuade the government not to harass Dr. Yunus and Grameen Bank. But all these only enraged the vengeful Prime Minister who seemed hell bent to settle a score with Dr Yunus. To underscore her displeasure she took the extraordinary step of refusing to meet a visiting US Assistant Secretary of State, and did not give audience to the voluble US Ambassador for a long time.

The situation seemed to have changed with the approach of the general election. The government is staring at certain defeat according to most polls. It has contrived a way to keep the opposition out of the election race, but its attempt to hold the election without the opposition has led to widespread protests and violence. It has been made abundantly clear by the international community (sans India) that such an election will not be credible. The government seems to be belatedly trying to garner at least some support from the international community. The PM has finally met the US Ambassador a few days ago for a long interview. TICFA is perhaps another manifestation of a last-ditch attempt to appease the USA. It is rumoured that USA is also being offered some lucrative contracts.

In taking these measures the AL-led government has gone against the grains of the principle of good policy making. It is an old wisdom of economics that government should adopt the policy that most directly addresses the problem. Any policy that skirts the main problem will be both expensive and of limited usefulness. For example, the root cause of an ongoing inflation is excessive money supply. A reduction in the money supply is the correct policy measure to reduce inflation. But sometimes government resorts to price controls, rationing, supply-demand management etc. to control inflation.  These usually fail to achieve the objective; instead additional distortions are introduced that impose substantial costs on the economy.

The root cause of the dispute with the USA is apparently the mistreatment of Nobel Peace Prize winners Dr Yunus and Grameen Bank. TICFA does not address this issue, and hence will not fully resolve the dispute. The Prime Minister and her advisers probably hope that the concessions given to the USA will sufficiently soften its negative attitude toward the Awami League. This can, if at all, succeed only partially since the USA is unlikely to take kindly to the uncalled for harassment of a long time friend who wears the US Presidential Medal of Freedom and Congressional Gold Medal on his lapel in addition to Nobel Peace Prize. The loss of credibility in supporting an unpopular and increasingly oppressive regime will also weigh heavily.

TICFA was done in secrecy; it was not debated in the Parliament and the public was never taken into confidence. The agreement was eventually signed into effect not by a regular government, but by a controversial interim government of sorts. Since an election-time interim government is not supposed to do anything but routine work in any democratic country, it is questionable if it was proper of them (and of the USA) to sign an international treaty.

The Minister of Foreign Affairs proffered a rather lame excuse that the agreement was finalised before the interim government came into being. It would seem that the AL-led government was unsure of the usefulness of signing TICFA until the last moment. Obviously, Bangladesh got into this agreement from a position of weakness.

The USA made full use of the government’s vulnerability to write the text in a manner of its choosing. Perhaps as an acknowledgement of Bangladesh’s discomfort with TIFA, it has superficially changed the title of the agreement. All that can be hoped for now is that the text dictated by the US is not entirely contrary to Bangladesh interests and its negotiators can make use of any opportunities to strike a balance. TICFA will remain as another example of how not to do an international treaty.

Source: Bd news24


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