Export to UK: Dhaka to enjoy zero duty even after Brexit
The UK will continue to provide zero-duty benefit on import of goods from Bangladesh and 47 other least developed countries even after Brexit.
Bangladeshi businesspeople have hailed the decision of the UK, Bangladesh's third largest export destination after the US and Germany.
“We welcome the UK government's decision as it will have a positive impact on our export, the garment industry, the economy and employment,” Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association, told The Daily Star.
“Since the Brexit last year, we were worried whether the British government would continue to provide us with the zero-duty privilege or not. We are now happy and hope our trade with the UK would increase further,” he said.
Bangladesh's exports, especially garment items, to the UK began to slide after the Brexit vote, as the Britons have been facing inflationary pressure.
Garment items, which account for more than 80 percent of Bangladesh's total export to the UK, saw nearly 6 percent negative growth with export earnings falling to $3.0 billion in the last 11 months of the outgoing fiscal year compared to that in the corresponding period of the previous fiscal year.
In fiscal 2015-16, Bangladesh exported garment items worth $3.52 billion to the UK.
Year-on-year growth of garment export to the UK hovered around 15 percent over the last few years. However, it is likely to see a negative growth in fiscal 2016-17.
The UK became a major export destination, as Bangladesh has been enjoying duty privilege under the EU's Everything But Arms (EBA) scheme and also because a large number of non-resident Bangladeshis live in the UK.
In the last 11 months of the outgoing fiscal year, Bangladesh exported goods worth $3.26 billion to the UK compared to $3.44 billion in the corresponding period of the previous fiscal year, according to data provided by the Export Promotion Bureau.
Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, said Dhaka would have to watch whether Britain and the EU sign any bilateral free trade agreements with the countries competing with Bangladesh.
If the UK and the EU give the same benefit to those countries, Bangladesh would face tough competition despite having the trade privilege given to the LDCs, he added.
In a statement issued on June 24, the UK government said it would use Brexit to cement Britain's standing in the world and meet its commitment to the world's poorest by securing their existing duty-free access to UK markets and providing new opportunities to increase trade links.
“The commitment means that around 48 countries across the globe, from Bangladesh to Sierra Leone, Haiti and Ethiopia will continue to benefit from duty-free exports into the UK on all goods other than arms and ammunition, known as everything but arms,” it read.
The UK government would also explore options to expand its relations with developing countries all of which currently benefit from a mixture of reduced or zero tariffs on the goods they export to the UK and to maintain the existing trade arrangements and avoid costly tariffs, it mentioned.
The UK continues to deliver enhanced support to these countries by helping them break the barriers to trade, supporting critical trade infrastructure like ports and roads, and building trade skills in those countries, so that they can better utilise the trade opportunities, it added.
In the statement, UK's International Trade Secretary Liam Fox said, “Our departure from the EU is an opportunity to step up to our commitments to the rest of the world, not step away from them.”
“Free and fair trade has been the greatest liberator of the world's poor, and today's announcement shows our commitment to helping developing countries grow their economies and reduce poverty through trade.”
Behind the duty-free exports are countless stories of people in developing countries working hard to provide for themselves and their families by exporting everyday goods such as cocoa, bananas and roses, resulting in lower prices and greater choice for consumers, added Fox.
In the same statement, International Development Secretary Priti Patel said the UK is using its position as a great, global trading nation to seize opportunities to lift countries out of grinding poverty. This will generate wealth, prosperity and investment needed to create millions of jobs and help the world's poorest people stand on their own feet.
“Around £20 billion a year of goods are shipped to the UK from these developing countries, accounting for around half of our clothing, a quarter of our coffee and other everyday goods such as cocoa, bananas and roses.
“Without these trading arrangements, clothing, for example, from some of the poorest countries could face tariffs of over 10 percent -- which could be passed on to UK consumers through higher prices at the till,” Patel said.
Access to the markets of developed countries also provides vital trade opportunities for the world's poorest people and creates jobs.
“For example, two million women work in Bangladesh's garment sector, which is a significant exporter of clothing to the UK. These opportunities help people to work their way out of poverty and build our trading partners of the future,” added Patel.
Comments