“Historically, the Democrats are always more careful about global human rights, labour rights and compliances in industries compared to the Republicans,” maintained distinguished fellow of the Centre for Policy Dialogue (CPD), Mustafizur Rahman.
After what pundits termed a ‘rancorous presidential campaign that exposed the depth of the political divisions in the United States’, the 2020 United States Presidential election (the 59th quadrennial presidential election) was held nominally on 3 November, 2020. The Democratic ticket of former Vice President Joe Biden and US Senator Kamala Harris defeated the Republican ticket of incumbent President Donald Trump and Vice President Mike Pence.
Trump thus became the first US President since 1992 and the eleventh incumbent in the country’s history to fail to win re-election to a second term.
Trump, 74, has been seeking another term in the office after what some political analyst underlined a chaotic four years marked by the Coronavirus crisis and an economy battered by pandemic shutdowns while Biden, 77, after a five-decade political career including eight years as Vice President under Trump’s predecessor, Barack Obama, sought to win the presidency on his third attempt.
The aftermath has been just as acrimonious and turbulent, as President-elect Joe Biden formulates his governing plan, and outgoing President Donald Trump refuses to concede. As of 20 November, Trump has not conceded and filed multiple legal challenges disputing the results of the election in multiple states.
Nevertheless, Biden and Harris are now scheduled to be inaugurated (as President and Vice President respectively) on 20 January, 2021.
As per many experts, Donald Trump has been an unorthodox President unlike perhaps President-elect Joe Biden, who is expected to take things over soon. The traditional take on American trade politics for decades has been that Republicans tend to be free traders while Democrats are more sceptical. Under Donald Trump though, things underwent a change after he started imposing tariffs on hundreds of billions of dollars in imports. Biden has been critical of Trump’s ‘America First’ trade policy, especially the rejection of multilateralism, but the changes under his administration are likely to be more incremental than transformational, feel many.
So, even as the world awaits to see what changes Biden would bring to the table there are also discussions as to what does this regime change mean for Bangladesh, for which USA is a major export destination, and where unfortunately Bangladesh had to concede the Generalised System of Preferences (GSP) facility, following the tragic Rana Plaza incident.
Meanwhile, foreign affairs analysts have said that the US-Bangladesh relations might get stronger with Joe Biden in the office but experts opined Dhaka needs to address its shortcomings in governance and human rights, the two issues that the new US administration will focus on globally. They said Biden, a seasoned politician with vast knowledge on global affairs, intends to ease relations with countries with which the relations became strained under the Trump administration.
Analysts said US engagements with Bangladesh have increased recently and holding of comprehensive economic partnership dialogues, signing of an open sky deal during the US Deputy Secretary of State Stephen Biegun’s visit in October, are all signs of that.
Nevertheless, according to the industry leaders here in Bangladesh, any major trade benefit on the export of goods bound for the USA with the changeover in power is unlikely as Washington rarely alters tariff structures on the import of apparel items. However, the regime change also means Dhaka can now step up its efforts to secure preferential market access and investment from the USA, they underlined.
For information, established by the Trade Act of 1974, GSP is the largest and oldest US trade preference programme, which promotes economic development by eliminating duties on thousands of products when imported from one of designated beneficiary countries and territories.
The Generalized System of Preferences (GSP) provides opportunities for many of the world’s poorest countries to use trade to grow their economies and climb out of poverty; it promotes sustainable development in beneficiary countries by helping these countries to increase and diversify their trade with the United States. The GSP programme provides additional benefits for products from least developed countries (LDC).
In addition to promoting economic opportunity in developing countries, the GSP programme also supports progress by beneficiary countries in affording worker rights to their people, in enforcing intellectual property rights, and in supporting the rule of law. As part of the GSP Annual Review, USTR (United States Trade Representative) conducts in-depth reviews of beneficiary countries’ practices in response to petitions from the interested parties.
In 2018, products valued at US $ 23.8 billion entered the USA duty-free under the GSP programme, out of US $ 238.4 billion worth of total imports from GSP-eligible countries. The US imports from all countries amounted to US $ 2.6 trillion in the year.
Currently, 120 developing countries and territories are GSP beneficiaries, according to the US GSP Review Book.
As far as Bangladesh is concerned, the GSP status has remained suspended since June 2013 after the nation’s deadliest industrial incident, Rana Plaza building collapse in April 2013 that left 1,138 workers dead and more than 2,500 workers injured.
The current tenure of the US GSP scheme is coming to an end soon and unless the Congress renews the preferential trade scheme, Bangladesh would have little possibility of gaining any extra benefit. Further, even though of the total shipment to the USA from Bangladesh, nearly 95 per cent includes the apparels but the US Government has never cut the import duty on apparels and the garment has remained excluded from list of the items that have been granted the GSP facility.
Consequently, apparel exporters from Bangladesh face 15.62 per cent tariff, which is one of the highest in the US markets while the same is way lower for countries like China, Vietnam, etc.
So far, USA has allowed duty-free benefit on apparel imports only to some African countries under the African Growth and Opportunity Act or AGOA, but many are of the opinion that these countries are not very strong in apparel manufacturing and lack adequate facilities and infrastructure to produce apparels that are at par with the demand and liking of the end-users in USA.
It may be mentioned here that now with the Democrat Joe Biden taking over the reins of the country (USA), some feel going could very well get a little more tough for Bangladesh. “Historically, the Democrats are always more careful about global human rights, labour rights and compliances in industries compared to the Republicans,” maintained distinguished fellow of the Centre for Policy Dialogue (CPD), Mustafizur Rahman, who not only feels Bangladesh might not get any major benefit on the export of garment items to the US because the tariff on the imports is fixed on the most-favoured-nation basis, rather, the new Democrat Government might impose more stringent conditions on labour and compliance issues practised in the country (Bangladesh).
The CPD distinguished fellow nevertheless underlined that Bangladesh may seek US investment under the new regime as the Trump administration has some reservations on foreign investment by American companies.
Bangladesh can lobby with US companies to attract investment from major American conglomerates as the Democrat Governments are liberal on foreign investment, Rahman stated while adding that it (Bangladesh) can further seek supports from the Biden administration at various multilateral forums like the World Trade Organisation (WTO) for the extension of the Trade-Related Aspects of Intellectual Property Rights, which he feels could benefit Bangladesh’s pharmaceuticals industry.
“We cannot predict trade based on the shift of the US administration. We also have to consider the dynamics of the US economy which is going through a slowdown at the moment as well as have to consider how the second wave of the Coronavirus pandemic unfolds there,” underlined the President of Bangladesh’s apex garment makers’ body (the Bangladesh Garment Manufacturers and Exporters Association-BGMEA), Dr. Rubana Huq while underlining some shifts in the trade policy between Trump regime and the Biden administration which may reshape the US trade relationship with China and Vietnam, cannot be ruled out.
To be more specific, lifting the punitive tariff imposed by the USA on China and reopening of the Trans-Pacific Partnership (TPP) discussions would certainly not be favourable for Bangladesh, felt the BGMEA chair but added that the dynamics of China’s competitiveness in apparel items and the capacity of Vietnam vis-à-vis Bangladesh in the products that Bangladesh manufacture could tilt (the balance) to Bangladesh’s favour somewhat.
The power shift may equally open the door for Bangladesh to revamp its efforts and lobby in the US for market access since it has been making so much of progress in the area of sustainability, added Rubana further.
Meanwhile, interacting with the media, Managing Director of Ha-Meem Group AK Azad reportedly maintained that there might not be any extra benefit due to the change in the US administration for the Bangladesh garment makers but added if the Biden administration maintains the same policy on China as enforced by Donald Trump, Bangladesh might benefit from shifting of work orders from China.
Now, if Bangladesh is able to get any added benefits from the new US regime under the President-elect Joe Biden, only time will tell.