The Bangladesh govt. has chosen to shed off the least developed country (LDC) status and will inform the United Nations (UN) of this pronouncement officially on 15 November. After the Economic Relations Department (ERD) sent a summary to the Prime Minister, she gave an instruction to start the graduation process.
The UN’s Committee for Development Policy (CDP) – a subsidiary body of the UN’s Economic and Social Council (ECOSOC) – at its plenary session in February 2021 is likely to suggest that Bangladesh deserves to graduate to a developing country.
The CDP wrote to the Bangladesh government, requesting it to notify by 15 November whether Bangladesh wants to move out of the LDC status, says the policy-making sources of government.
If all goes according to plan, Bangladesh will be known as a developing country (DC) in the UN’s General Assembly in 2024. Bangladesh will present the matter of its transition to DC status at a virtual meeting with the CDP.
With current LDC, Bangladesh enjoys various benefits including duty-free export facilities, low-interest foreign loans and grants from developed and developing countries.
The country’s pharmaceutical sector is also getting an exemption from the Agreement on Trade-Related Aspects of Intellectual Property Rights Other initiatives (TRIPS) which will continue for the LDCs until 2033.
Whereas Bangladesh will lose these facilities after graduation. To deal with the post-graduation tremors, LDC countries, including Bangladesh, will offer maintaining the Generalized System of Preferences (GSP) facilities for another 10 years at the World Trade Organization (WTO) ministerial conference to be held in June next year.
Besides, these countries will also pursue release from intellectual property rights for medicine till 2033 and 10 years for other cases. Bangladesh is confident that the WTO meeting will reach an optimistic decision on these issues.
The UN’s Committee for Development Policy (CDP) at its plenary session in February 2021 is likely to suggest that Bangladesh deserves to graduate to a developing country.
Despite dangers, the issue of transforming from LDC is a ‘noteworthy achievement’ for the country’s economy, according to the General Economics Division (GED) of the Planning Commission.
At the same time, Bangladesh’s GSP facilities in the European Union will continue till 2027. But, GSP benefits, offered by other countries, will be void instantly after the graduation to the DC status.
As a consequence, it is likely that Bangladesh may face huge losses in exports. One of the actions that Bangladesh has taken to block the possible setback is the signing of bilateral free trade agreements (FTAs) with various countries and regional alliances.
The government has also given much importance to diversifying both export products and markets.
Positive aspects of DC status
Foreign direct investment (FDI) will rise if the country’s capacity surges, so will the revenue-to-GDP ratio. If the tax-to-GDP ratio is increased from the current 10% to 12%, Bangladesh will not face any key challenge even after its LDC graduation.
Stating numerous initiatives being taken to counterbalance possible losses in exports after the graduation, Commerce Secretary Zafar Uddin told that LDC countries, including Bangladesh, will take a robust stance at the next WTO ministerial meeting to maintain the GSP facilities for 10 years even after the graduation.