LDC graduation won’t affect trade too much
Bangladesh's exports will not be as affected as feared following the United Nations country status graduation from a least developed to a developing nation in 2026, said Senior Commerce Secretary Tapan Kanti Ghosh yesterday.
Bangladesh has the strength to avail a smooth graduation, he said.
Since the local exporters are staging a strong performance in the US markets even in the face of a 15.62 per cent duty, they can do the same in the European Union (EU) after the graduation, he said.
After the graduation, Bangladesh will lose its preferential market access to developing and developed countries, facing more than 9 per cent in duties on exports to the EU.
Ghosh is also not expecting too much from the initiatives of World Trade Organization (WTO).
According to him, the last WTO summit in Geneva in June this year, the 12th Ministerial Conference (MC12), failed to prove that it was an inclusive body, at least to the LDCs. The apex trade body's non-transparency also disappointed him.
"I was disappointed attending the ministerial conference of the WTO as it was not inclusive at the final stage of negotiations and was not transparent," Ghosh said.
He was addressing a dialogue on "WTO-MC12 Outcomes Next Steps for Bangladesh as a Graduating LDC" jointly organised by the Centre for Policy Dialogue (CPD) and Friedrich Ebert Stiftung at the CIRDAP in Dhaka.
Experts, researchers, businesspeople, exporters and government high-ups attended the discussion.
"We have to look forward as a developing country. Not begging as an LDC country. We have that strength," Ghosh said.
He also cited the global crisis and some domestic problems as some of the challenges that needed to be braved for a smooth LDC graduation.
"We need to work and we are trying to bring some reforms so that the trade is not affected after the LDC graduation," he said.
Although Bangladesh has been talking about production diversification for many years, little has happened, he said.
Rather the share of garment items in the national export pie in fact grew and the other products could not stage a strong performance, he said.
Had export of five to six other products increased, Bangladesh's earning from export would have crossed $200 billion, he said.
He also does not see any impediment to the export of goods except garments under a proposed EU GSP regulation for a tenure running from January 2024 to December 2034.
Bangladesh's garment items already passed the benefit eligibility threshold by accounting for more than 7 per cent of EU garment imports, he said, adding that Bangladesh was holding talks on this.
But other products have the opportunity to enjoy benefits under the new GSP regulations to the EU markets, he said.
Some 60 per cent of the country's goods are shipped to the EU and the UK. The UK has already confirmed even more generous trade benefits after the LDC graduation.
The senior secretary also said some major trading partners of Bangladesh were eager to sign free trade agreements and some were not as the trade regime was yet to be massively liberalised.
Bangladesh maintains a protectionist trade regime mainly for collection of revenue and export subsidies crossed Tk 30,000 crore last fiscal year, he said.
According to the WTO secretariat estimates, almost 90 per cent of all export losses of 12 graduating LDCs will be on account of Bangladesh, said Mustafizur Rahman, a distinguished fellow of the CPD.
Bangladesh's export loss due to loss of preferential market access could be equivalent to about 14.3 per cent of the country's global export, he said.
He suggested that Bangladesh negotiate with Japan, Canada, China and India for extending the transition period when the graduation would be made while benefits continued to be offered.
It could be similar to the EU's trade benefits, which would be available up to 2029 to Bangladesh, he said.
While chairing the dialogue Debapriya Bhattacharya, another distinguished fellow of the CPD, said although the WTO-MC12 conference acknowledged the demands of the LDCs, it made no assurances.
The WTO-MC12 has some other, big contributions tackling the severe fallouts of the Covid-19 and ensuring food security, he said.
It should not be confined only to the issues of ensuring direct benefits to the LDCs, he said, adding that Bangladesh needs to think as a developing nation.
Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry, said 12 potential export sectors were coming up as enablers of diversification.
However, they need government support like the garment sector. Although some developed countries like Germany started production of power from coal, Bangladesh stopped the practice considering the negative impact it has on the environment, he said.
Arshad Jamal Dipu, a director of the Bangladesh Garment Manufacturers and Exporters Association, also said the exporters have already started considering Bangladesh to be a developing country.