Bangladesh has sought trade benefit from the EU and the US as the Covid-19 pandemic is taking a heavy toll on the south Asian nation’s economy and wants the EU to continue providing the current zero duty benefit even after graduating to a developing country.
Bangladesh has been enjoying zero duty on exports since 1973 under the EU’s bounteous ‘Everything but Arms’ -EBA scheme for the Least Developed Countries (LDCs). But Bangladesh will become a developing country officially in 2024 and will get three more years as a grace period to prepare. Generally, the EU does not offer trade benefits to any country under EBA after graduation from LDC.
Therefore, after 2027, Bangladesh will have to extend either the GSP Plus or the current EBA to enjoy the zero-duty benefits of the European Union, a 64% destination for Bangladesh’s annual garment shipment of $34 billion.
In this circumstances, the commerce ministry sent a letter to the EU last month seeking the EBA extension, said Commerce Secretary Md Jafar Uddin.
“In the letter we did not mention any particular period or any particular scheme. We sought the continuation of the current EBA as we have been facing crisis in different ways due to the coronavirus pandemic,” he said.
Bangladesh has also demanded trade facilities from the USA, the country’s single largest export destination where over $6 billion worth of garment items are shipped a year. Bangladeshi exporters face 15.62% duty while sending apparels to the USA although Bangladesh government has already assigned a special committee to attract more American investment.
The usual grace period for three years up to 2027 will not work for Bangladesh as the economy has been reeling from the coronavirus shock, industry experts opined.
Mohammad A Momen, a Director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said, “Our expectation is that the EU will extend its EBA for Bangladesh at least for 10 more years after the official graduation in 2024,”
Vietnam has already signed an FTA with the EU for which Bangladesh will face immense competition if the EBA is not extended.
To avail the benefit, Bangladesh needs to improve in four key areas: environmental protection, labor rights, anti-corruption and human rights. Moreover, Bangladesh will have to ratify the 27 UN Conventions for the EU trade facility.