With the signing of the Regional Comprehensive Partnerships (RCEP) agreement, the world is witnessing a significant milestone in the global economic scenario. The RCEP agreement will cover 15 countries with a population of 230 crore which is about one-third of world population, and the combined GDP of these countries is worth about $24,800 billion (in purchasing power parity), which is equivalent to about 29 per cent of the global GDP.

The RCEP is going to be the world's largest trading bloc, larger than the EU, or the CPTPP (the transpacific partnership agreement-TPP, minus the US) or the US-MCA (erstwhile NAFTA). RCEP countries' trade value in 2018 was about $2800 billion, 57 per cent of which was intra-RCEP trade.

To recall, in recent years, the number of regional trading agreements (RTAs) of various types has been on the rise. Some 305 RTAs are already in force, and the WTO has been notified about another 496, which are being negotiated. These RTAs cover either goods or services or both. Indeed, 157 of these RTAs are economic integration agreements (EIAs), which go beyond trade in goods and services.

However, the RCEP does stand out among this large number of RTAs. As the name implies, it is an agreement that goes beyond trade and tariff liberalisation, into cooperation in areas of e-commerce, removal of technical barriers to trade and non-tariff barriers and setting of common standards and various measures to promote intra-regional trade and investment. The idea is to take advantage of comparative advantages through initiatives to promote and foster deeper economic integration.

The RCEP agreement is expected to come into force from early next year. Tariff liberalisation plan, which aims to cover 90 per cent of tradable items, will be implemented over the next 20 years. The 20 chapters of the agreement lay out the foundation for cooperation among the 15 members that are envisaged to be deeper and broader than the ASEAN free trade agreement and the bilateral FTAs that the ASEAN has with the five RCEP-participating countries (China, Japan, South Korea, Australia and New Zealand). India had opted out at the last moment but could join at a later stage.

The signing of the RCEP deal ought to be followed closely and keenly by Bangladesh, for several reasons. First, the RCEP includes a number of LDCs, two of which, Myanmar and Lao PDR, will be graduating in coming years, similar to Bangladesh.

Cambodia is the other LDC in the RCEP. Timor-Leste, another graduating LDC in the region, is trying to gain ASEAN membership. The RCEP membership will give these graduating LDCs access to a large market, on preferential market access terms, at a time when Bangladesh will no longer be eligible to enjoy preferential access under the LDC schemes of RCEP members such as China, Japan, Australia, South Korea and other preference providing members.

The RCEP indicates how South-East Asian LDCs are strategising in view of addressing the challenges of LDC graduation. Second, and this should be a matter of grave concern for Bangladesh's policymakers, Vietnam, a major competitor of Bangladesh, particularly in apparels, will enjoy preferential market access in the lucrative and expanding RCEP market, as a member of the agreement.

Vietnam has already signed bilateral FTA with the EU and is also a member of the CPTPP. If under the new Biden administration, the US decides to join the CPTPP (as a matter of fact the TPP was the brainchild of the Obama administration), Vietnam's preferential market access will be guaranteed in almost all major markets, at a time when Bangladesh will lose preferential access in these markets following its LDC graduation. Bangladesh's competitiveness scenario vis-a-vis Vietnam will undergo radical changes in view of these developments.

Third, since the RCEP is expected to create a conducive environment for investment and development value chains and production networks, countries such as China, Japan, and South Korea will have an added incentive to invest in the RCEP member countries with a view to taking advantage of the preferential market access offered under the regional arrangement. Bangladesh's efforts to attract FDI from these countries could be negatively impacted because of this.

Bangladesh has decided, and rightly so, to give importance to signing bilateral FTAs as a coping strategy to address the loss of preferential market access because of LDC graduation.

A number of initiatives are being taken in this regard. However, the significance of such FTAs in economic terms will hinge primarily on to what extent these have implications from the perspective of expanding and deepening trade and investment cooperation.

As the RCEP indicates, positive impacts of these RTAs will critically hinge in going beyond trade, into services, trade facilitation, elimination of NTBs, e-commerce and ability to deepen investment ties.

Bangladesh should give due consideration to the issue of deepening ties with the ASEAN and the RCEP, as a strategy in going forward. One promising development in this regard is the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)-FTA, negotiation of which has recently been completed.

The framework agreement for the BIMSTEC-FTA was signed in 2004. Regrettably, it has taken 16 years and many rounds of discussions to complete the FTA negotiations. The BIMSTEC-FTA was also envisaged to include services. Regrettably, these negotiations will be initiated soon. Indeed, the BIMSTEC-FTA could potentially be a game-changer in opening a window for Bangladesh for clear links with the ASEAN and the RCEP.

It is Bangladesh which should take the lead in this regard since it has most to gain from deepening ties with this RTAs. The BIMSTEC offers Bangladesh a foothold into the formidable ASEAN market via the two ASEAN members, which are also the members of BIMSTEC: Thailand and Myanmar. Closer cooperation with the ASEAN, perhaps through a future BIMSTEC-ASEAN FTA will provide Bangladesh with an opportunity to have closer economic ties with the RCEP.

However, for this to happen, Bangladesh will have to take careful and adequate preparations in developing the needed negotiating capacities and building compliance assurance (in areas of certification, labour standards, harmonisation and standardisation of customs procedures) and design its domestic trade and investment strategies to be able to take advantage of closer economic linkages with these regional FTAs.

Policymakers should seriously think of establishing a dedicated negotiation cell, like the one in the Ministry of Commerce to deal with WTO issues, to develop and put in place the needed human resources to pursue these negotiations, a task which will assume increasing importance in the coming days given Bangladesh's preparedness towards sustainable LDC graduation.

The author is a distinguished fellow of the Centre for Policy Dialogue.