The dictum "trade, not aid" did once hold some sway, at least among academics, but also among those who are critical of the country's over-dependence on foreign assistance. One should not exaggerate the pedigree of the latter school of thought, however. It was not long ago that trade, like aid, was widely regarded with antipathy if not suspicion by both policy makers and academics. But, over the years, a greater degree of openness of the economy to international trade appeared to be gaining acceptance. Given the gathering force of globalisation, it can be said that this was almost inevitable. Whether it was a good thing is not indisputable, however, and doubts keep resurfacing from time to time. The fading months of 2003 appeared to witness a reemergence of such doubts.

I am not sure what led to the renewed expression of misgivings about the system of international trade that has long been seen to impose unequal exchange on developing countries like Bangladesh. The caucus politics among groups of developing countries in the run-up to the Cancún trade talks in September this year, and the subsequent failure of those talks, might have contributed to this. But it is hard to shake off the feeling that the recent visit of Joseph E. Stiglitz might have something to do with the rejuvenation now being witnessed among those who are critical of the external economic world dominated by the west. As the Nobel laureate trekked through this poor land, top political leaders, academics, bureaucrats, and captains of industry seemed to hang on his every word, which was, as reported in the press, mostly against the evils of globalisation. A great chorus rose from his audience: globalization, bad. Newspaper editorials castigated the rich and powerful countries of the world, and the international institutions dominated by them, for the injustices they perpetrated on poor countries like Bangladesh through globalisation.

These brief paragraphs are not about globalization as such. Though a close family resemblance between the detractors of globalisation in general and the indigenous critics of Bangladesh's trade dependence in particular is easy to detect, it is the latter group's thinking and the nature of a country's participation in international trade that primarily concern me here. I note, though, that at a more mundane level, policy makers and business leaders have also become fearful of the imminent prospect of the country losing some of its privileges and protection in western markets.

As with just about any effort at categorisation, the genre of thinking I have in mind comes in various shades. Still, it is probably fair to characterise it, first, by a desire to preserve autonomy in national economic decision-making. In addition, suspicion of political design on the part of out trade partners of the west, particularly the US, is often invoked. And a great deal of antipathy towards international trade and its institutional framework, which is seen to be rather toothless and unable to protect the interests of developing countries, is certainly a cachet of this line of thinking. I shall skirt around the second facet, being not privy to political designs under trade deals concerning Bangladesh, even though arm-twisting by the rich and powerful countries is by no means uncommon.

Thirty-odd years ago any thought that the country could embark on some kind of export-based industrialisation was apt to be met with derision. Yet a good beginning in that direction was made with the establishment and rapid expansion of a ready-made garments industry, catering for the export market. In this, the businessman's acumen appeared to be well ahead of the economist's. While the former quickly recognized where the comparative advantage of the country lay in international trade, economists of the country generally remained disdainful of the very concept. Today the industry accounts for over three-quarters of the country's merchandise exports, as well as provide very significant employment opportunities. The traditional dependence of the country on a single primary commodity, jute and jute goods, was giving way to export diversity, albeit modest.

The success in the industry was of course not universally lauded. On the contrary, critics were quick to point out the industry's almost total dependence on imported raw materials and hence its minimal contribution to the country's foreign exchange "saving". With some of the profit going abroad to foreign collaborators in the industry, critics also came down hard on its inability to generate much value added either, except for wages. There is a strange case of a blind spot for the detractors, even among economists, here: wages are the most important component of national income in a modern economy and are not to be derided. Wage rates in the industry are low, by some standards but not by others; this raises issues of importance but not of relevance in the present context.

But to come back to the present, the very success of the sector in foreign markets is now, ironically, seen as evidence of a new kind of foreign trade dependence. Reference has, for example, been made to the dependence of Bangladesh ready-made garment exports on a limited number of rich country markets. The point here about dependence on the developed countries as such is a bit strange. Bangladesh sells almost all its exports of apparel to markets of rich countries because it enjoys a large comparative advantage in the industry. That kind of 'dependence' was the only way benefits of trade in the product could accrue to the country. Try to imagine, for contrast, Bangladesh selling ready-made clothing in China in any significant quantity!

The critics' emphasis is of course on the 'limited' number of developed country markets. Thus, it is pointed out that about 40 per cent of the country's exports of these items go to the US, with a similar proportion going to the European Union. It is at least debatable whether the fact of 40 per cent of the exports going to as many as fifteen countries in Europe (even though they are members of an economic union, soon to be enlarged by another ten members), is an illustration of great export dependence.

It is, however, the dependence on the US market that gets the most attention although the share of the export going to the two markets is about the same. In the worst case scenario presented by some analysts, the US could use this dependence to influence Bangladeshi decision making regarding the exploitation and export of the country's reserves of natural gas. But critics could also point to the contentious recent US decision not to renew its Generalised System of Preferences (GSP) for Bangladesh unless it allows trade union activity in its Export Processing Zones (EPZ). Incidentally, the linking of labour standards with trade is a contentious issue that has still to be settled in multilateral forums, which makes the US position here unacceptable unilateralism.

The hints of political arm-twisting can hardly be a matter for the economist to discuss with any confidence. But the prospect of trade discrimination against Bangladesh in the US markets vis-a-vis other developing countries, especially from Africa, has also been cited as a real threat. Whether or not such action has any extra-economic motive, this brings to the fore issues that are directly relevant to the nature of participation of a country in the global economy. Trade discriminations do affect the competitiveness of individual countries through their impact on relative import prices. If newcomers from Africa are given zero-tariff access to US markets under the present (and entirely justifiable) American programme of support for their development, while imports from Bangladesh are subject to tariffs, then of course the import prices of goods from the latter are pushed up relative to those of African imports.

But relative import prices do not depend on tariffs alone. They also depend on the basic comparative advantage of the suppliers. Tariff barrier matters; but a great deal of international trade also depends on the trade partners' real comparative advantage. And one should have thought that with the country's experience in trade in ready-made garments and its still very low wages, Bangladesh may well be at some advantage vis-à -vis newcomers to the US markets, at least partly compensating for trade discrimination against it. Neither should the discontinuance of GSP be regarded as a devastating setback for the same reason. Trade covered by the scheme is in any case small compared with the total Bangladesh exports from the EPZs. With the 'worst' case of export-dependence, that on the US, thus seen as less than a straight jacket for Bangladesh, the dependence on other rich country markets should also look a little less forbidding.

Aside from specific challenges in individual markets and products, new competitors will inevitably emerge in course of normal evolution of international commerce, just as Bangladesh emerged as a major garment exporter. This consideration leads to other issues of importance, issues that are given far less attention than they deserve. Bangladesh has rested on its laurels, if that is an apt metaphor, of success in a limited range of products offered by the garments industry for three decades without any serious effort at moving into other export items. Bangladesh cannot forever rely on exports of ready-made garments alone. This is a scenario of creeping dependency that deserves far more attention than concerns of our being at the mercy of some powerful trading partners. Inevitably, the country will have to shift to other exports, in particular products with higher value added and skill contents, leaving items with lower skill contents to newcomers in the field, as the present-day newly industrialized countries have done before.

This, however, is not exactly how critics of the country's "new dependence" see its participation in international trade. Considerations of economic sovereignty, or autonomy of policy decisions, and distrust of the present system of international trade stand in the way. It should be useful to take a brief look at the nature of national economic sovereignty in the modern world and the system of international trade in which a large array of economies, from the very rich to the very poor, operate.

Those who bemoan the loss of national policy autonomy tend to overlook the great changes in the world economy that have taken place over the past few decades. These changes have made national decisions far less autonomous than before. This is not to deny the existence of large differences in individual countries' ability to impose their will on others. Such differences are a fact of international life. But there are many major areas where domestic economic policies of most countries, including the most powerful, are not fully autonomous. Thus, for example, few industrial countries can prevent an industry from moving abroad, if it chooses to, taking jobs with it. The flow of financial resources in and out of a country is no longer entirely a matter of autonomous policy decision, a change brought about by the removal of barriers to capital flows over the past few decades and the relentless spread of information technology. The raising of trade barriers to protect domestic industry is not a policy decision that can be taken irrespective of how trade partners may react to it.

Critics also ignore the many cases of loss of policy autonomy that are accepted by mutual consent. This is nowhere clearer than in international trade. In general, the participation of a country in trade by itself implies a surrender of a part of such autonomy, however small. Rules of multilateral trade were worked out in a long series of trade negotiations, from the Geneva Round in 1947 to the Uruguay Round that ended in 1994. These rules in effect meant that each contracting party (à

la General Agreement on Tariffs and Trade (GATT)) agreed to set limits to unilateral national action. Rules on government procurement -- that restrict a national government's prerogative to give contracts to domestic suppliers for procurement of materials and equipment for the public sector without allowing foreign suppliers an opportunity to bid for them -- stand out as an illustration of such infringement on "sovereignty". But there are many other, and far more important, areas where the principle holds.

Multilateral trade rules have of course been often abused, infringed on, or ignored. Nevertheless, the establishment of these rules has been among the best examples of multilateral institution building in the post-war years. The net result of the series of trade negotiations completed over the past fifty years has been a strengthening of the multilateral trading system as well as a very considerable liberalisation of international trade. That this has greatly contributed to the unprecedented growth of the world economy in that period will probably be accepted by all but the most strident critics of the system. That many developing countries, though not all, have benefited from the system will be less widely accepted but is nevertheless a fact and has been one of the most encouraging features of the world economy in recent times.

While the rules of multilateral trade have been flouted, this has not been done as often with impunity as some detractors of the system seem to claim. Examples of rich and powerful countries having been pulled over for flouting rules are certainly not rare. In recent years and months, the World Trade Organisation (WTO) ruled against the European Union over its banana import regime, and the US over its protective duties on steel imports, as well as over its subsidisation of certain export enterprises (the so-called Foreign Sales Corporations). These, and the remedial actions that were taken as a result, are certainly grounds for giving the system, as they say, at least two cheers, if not three. The fact that in each case the threat of retaliation was instrumental in bringing about a resolution of the dispute does not diminish the value of the system.

Detractors of trade necessarily focus on what is known in the economists' parlance its demand side (the market and constraints imposed by it), rather than the supply side (production and policies that determine competitiveness). But supply considerations are no less important in determining the nature and size of trade. The huge differences between developing countries' export performance stem very largely from differences in their competitiveness and policy orientations. With some notable exceptions, the external limits and opportunities facing individual developing countries are not all that different. For Bangladesh, deficient physical infrastructure, congestion at its ports, lapses in maintaining standards of quality of its exports, falling standards of education, and inadequacies in its trade-orientation policies are, for example, hardly less important than constraints imposed from abroad in determining its trade prospects. And, while on the subject of external-orientation, even the choice of weekly holiday that least affects commerce with the rest of the world -- Indonesia and Malaysia, both Muslim countries as well as successful exporters of manufactures, have a Saturday-Sunday week-end while Bangladesh has chosen Friday -- does matter. As does a bureaucracy that is fully conversant with the intricacies of modern trade relations.

If Bangladesh is to integrate itself into a globalising world economy, as it must, policy makers have to be more concerned with these considerations than with external constraints. International trade has to be seen as clusters of opportunities as well as challenges. It is inevitable that Bangladesh will lose some of its trade privileges as a poor developing country. The benefits of the GSP have already eroded and will at some point disappear with the termination of the system. Trade in textiles will come under the ambit of multilateral rules of international trade. At the same time, tariff and non-tariff barriers to imports into the country will have to come down. This is the general scenario that the country, like other developing countries, will need to accept.

The critics' unhappiness with a system dominated by the west has often led them to suggest that developing countries trade more among themselves. The history of regional trading arrangements among these countries all over the world has, however, been mostly one of failure, even though there have been a few notable exceptions. While these arrangements have been mushrooming, if only on paper, and Bangladesh may not be able to resist being drawn into them, it is critical to remember that for the foreseeable future trade with industrial countries will dominate the country's external trade. Equally important, it will in general remain the most efficient way of trading, the regional trading arrangements remaining only a second best choice. The country's scarce expertise in management of external trade relations should also yield higher dividends in the former than in the latter. Efforts at integration with the world economy should primarily be made through more vigorous participation in trade in its the multilateral framework.

Bangladesh must learn to live in a fast-globalising world economy. This is a compelling need that no intellectual appeal of anti-globalisation or fascination with policy autonomy can obviate.

Mahfuzur Rahman is a former United Nations economist.