To mitigate post-LDC era, the government should move to ink free trade agreements with its major partners UN and experts says
In a recently published report, the UN says Bangladesh must move to free trade agreements with its major partners including China to cope with the possible loss of trade preferences in the post-LDC era.
Bangladesh officially met the criteria for LDC (Least Developed Country) Graduation for the first time in 2018.
Bangladesh is expected to meet those LDC Graduation criteria for a second time in 2021. In such a case, the country would formally proceed from the LDC status by 2024.
The United Nations Department of Economic and Social Affairs (UN/DESA) and the United Nations Conference on Trade and Development (UNCTAD) along with five other United Nations regional commissions produced the report.
Though anxiety prevails as the loss of LDC status may give rise to potentially important economic prices due to the withdrawal of GSP facilities from the European Union, Canada, Japan, Australia, and other markets.
Presently Bangladesh enjoys a 12% preference margin for its apparel industry under the EU’s ‘Everything but Arms’ (EBA) initiative, which gives Bangladesh a significant price benefit in its prime export market.
In this situation, the UN report said that “an FTA with Europe could be an alternative to EBA and the Generalized System of Preferences Plus (GSP+).”
The report wondered “The country is unusual in that it has no bilateral trade agreements.”
The UN report comes at a time when the government has already exploring ways to sign FTAs with a number of countries in the region.
Though, those initiatives are now stalled at different phases due to internal and external factors. Like with Sri Lanka and China.
Top economists of the country called for restraint against signing the FTA with giant economies like China or Europe. As the current world is facing a common phenomenon with interest of local industry may get hampered as the cheaper Chinese goods may flood the local market in the aftermath of any such deal with China.
“It is very true that an FTA with China would hardly be feasible or beneficial for Bangladesh,” said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh”
“So instead of FTA, we should go for negotiating Preferential Trade Agreements with China,” Mansur said.
“When it comes to FTA, we should, first of all, target small or mid-sized economies in the region like Sri Lanka or Thailand rather than the big economies,” said Professor Mustafizur Rahman, Distinguished Fellow of the Center for Policy Dialogue.
“In the meantime, we have to develop the capacity of our local industries while addressing our labor standard or copyright regime,” Rahman said.
Meanwhile, when it comes to the European Union, the country’s strategy should be to gain GSP Plus facilities, he added.