What Trump’s Victory means for Bangladesh Economy By -Zahedul Amin
Trump’s unexpected election victory may come as a surprise to many, as political pundits and local polls had widely predicted a comfortable win for Hillary. So, defying all logics and predictions, Trump came out on top, to the chagrin of many across the world. As the dust settles, it is time to project the main gainers and losers in the aftermath of the battle for White House. Bangladeshis, in general, were widely and squarely against Trump presidency, considering his anti-immigration and anti-Islam rhetoric. Given the whimsical nature of the business tycoon, many were unsure about his true motives. As US rules the roost in global affairs, the election of US president has a direct impact on international and economic affairs of most countries across the world.
Bangladesh’s economy is expected to be impacted by the change in helm at the White House, with the Senate and Congress strongly under Republican control. As a result of Trump presidency, policies towards the Asia Pacific region, in general, and Bangladesh in particular are bound to evolve.
GSP and TICFA
As a Least Development Country (LDC), Bangladesh previously enjoyed preferential trade terms, mostly on a wide range of products, but excluding apparel. In the recent past, the Generalized Systems of Preference (GSP) was scrapped, supposedly due to a series of industrial accidents. This came as a huge blow, especially when the government and BGMEA had been strongly lobbying for preferential terms for apparel export to the US. The US government subsequently signed a Trade and Investment Cooperation Forum Agreement (TIFCA) with Bangladesh, which was aimed at mitigating bilateral differences.
The incoming Trump administration is likely to keep economic agendas at the forefront, and refrain from providing additional concessions for apparel import. Although Bangladesh’s apparel export to US has grown by double digit figure (c. 11%), currently standing at USD 5.4 billion as of FY2015-16, export growth in the future may stutter. With Trump’s strong inward looking economic policies, countries like Bangladesh are unlikely to gain back the lost GSP concessions.
Post 2014 election, many of the Western countries, including US, decided not to extend full political support to the new government, which triggered a crisis of sort. Another term of democrat rule with Hillary at the helm, would have caused further deterioration in bilateral relationship with Bangladesh. Government’s treatment of Nobel winning Dr. Yunus had been a thorny issue and would have contributed to exacerbating relationship, had Hillary become the President. Trump administration would most likely turn a new leaf while dealing with Bangladesh, which may be a lucky break for our government.
Although U.S immigration is currently beyond the reach for average Bangladeshi, due to Bangladesh’s exclusion from DV eligible countries. Many Bangladeshis have somehow entered the country, and are currently staying as illegal immigrants. According to a recent research, there are 50,000 plus illegal Bangladeshi immigrants in New York City. The figure is likely to be much larger across the country. As promised to his supporters, Trump will heavily clamp down on illegal immigrants, which may result in forcible deportation for many of these illegal immigrants.
If Trump follows through his xenophobic pledges, many bright international students will be forced to return home. Currently, close to 6,000 students are studying in different US universities, along with thousands of professionals engaged in different sectors. With rising hostility towards immigrants, many Bangladeshis would be forced to either move to neighboring Canada or return back home with their knowledge and vigor. This may potentially be a major boom for Bangladesh, as inbound NRBs would be able to utilize their skills and knowledge for developing our private sector.
US government is one of the major donors for Bangladesh, contributing to millions of dollars in development aid. As Trump administration takes up the mantle, flow of development funding maybe further stifled, at least in the medium term. This may significantly constrict major development sector led projects funded by different US based donor agencies.
Overall, Trump’s ascendency as the president would cause ripples across the world, which we would be able to fully fathom within the next 1-2 years. However, our government should look to capitalize on changing winds in Capitol Hill to forge a new relationship with US. Strong relationship with the most powerful nation in the world, will bear rich dividends, both politically and economically.
Zahedul Amin is the Co-founder and Director of Finance at LightCastle Partners, an emerging market specialized business planning and intelligence firm.