Post-Brexit UK: Duty-free benefits to continue for Bangladesh

Bangladesh will continue to enjoy duty free benefits for the export of its products to the United Kingdom after the end of the Brexit transition period, the UK government has said.

Bangladesh and 46 other least developed countries will not face any tariffs after that period. Low-income and lower-middle income countries will also benefit from lower tariffs compared to the UK Global Tariff, UK Department for International Trade, Foreign, Commonwealth & Development Office said in a statement on Tuesday.

The trade preference scheme will cover any eligible countries that do not have their existing trade agreements transitioned into a new agreement with the UK.

"Free trade helps businesses to grow, boosts the economy and creates new jobs. We are making sure that the world's poorest countries can continue to take advantage of the opportunities that free trade offers them by allowing them to export their products to the UK at preferential rates," said UK's International Trade Secretary Liz Truss.

She said this would assist developing economies in establishing strong industries, creating jobs and help them reduce their reliance on overseas aid in the long term.

The UK left the European Union on January 31. Britain is now in an 11-month period, known as the transition, that keeps the UK bound to the EU's rules. The transition (sometimes called the implementation period) will end on December 31, 2020. It cannot be extended beyond that date, BBC reports.

After the US and Germany, the UK is the third largest export destination for Bangladesh. Currently, more than 700,000 Bangladeshis live in the UK. Demand for Bangladeshi apparels, vegetables, pharmaceutical items and processed foods is growing there.

Bangladesh exported goods worth $4.83 billion to the UK in the fiscal 2018-19. Garment products constituted 93 percent of the exports. But the pandemic hurt the businesses in the next fiscal.

"I think the only benefit is that we will continue to enjoy the same preferential treatment, that is duty free access by complying single transformation process," said Rubana Huq, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) on the UK's decision.

"Since the UK may not change its tariff regime after Brexit, this will save a market of $3.17 billion dollars ..." Huq told The Daily Star in a WhatsApp message.

The UK takes around 11.3 percent of our garment exports, so the continuation of existing tariff structure would keep the employment and export earnings of this sector protected to a significant extent, she said.

Britain imported approximately £8 billion-worth of textiles and apparel products from eligible countries last year. This accounted for 30 percent of all textile and UK apparel imports, according to the statement from the UK Department for International Trade.

The country also imported approximately £1billion-worth of vegetables from eligible countries, accounting for around 8 percent of all vegetable imports. It is planning on improving the scheme to better support developing countries, the statement said.

More details will be announced next year.

British importers will continue to pay zero or reduced tariffs on everyday goods such as clothing and vegetables from the world's poorest countries, the statement said.

The UK's Generalised Scheme of Preferences (GSP) will cover all the same countries that are currently eligible for trade preferences under the EU's GSP, it added.

Liz Truss said the scheme would also help British businesses continue trading seamlessly after the UK leaves the EU, as well as giving British consumers continued access to some of their favourite products at affordable prices.

UK Foreign Secretary Dominic Raab said globally Britain is a partner of choice for developing countries.

"As today's announcement demonstrates, we take a liberal approach to trade, recognising that many developing countries want to trade their way to greater prosperity," he said.

"We back that up with the integrity of the investments UK businesses make, and our commitment to be a force for good in their communities through our support for green jobs, climate change mitigation and programmes to deliver girls education," he added.