BGMEA to avail law firm’s advice on GSP extension
The BGMEA has signed an agreement with Sidley Austin LLP to receive advisory services in efforts to get duty-free trade benefits to the European Union extended once Bangladesh leaves the group of least developed countries (LDCs).
The graduation from least developed to a developing nation in 2024 is set to mark the end of the Generalised System of Preferences (GSP), a component of which is the EU's Everything But Arms (EBA) initiative.
The EBA allows duty-free access to Bangladesh's shipments considering the country's LDC status.
However, the EU has offered a three-year grace period on the facility following the graduation.
The Sidley lawyers will advise the BGMEA in preparing arguments and strategies to prolong preferential market access into the EU, with a focus on the ongoing EU GSP reform discussions and Brexit.
The law firm's services are free of cost under its Trade for Development Initiative, Emerging Enterprises pro bono programme, said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
The 11th largest US-based law firm having offices globally is said to have annual revenues of more than $2 billion.
"Sidley will be assisting the BGMEA to develop policy briefs to be submitted to the government so that the perspective of the private sector is clearly communicated to the policymakers," she said in a WhatsApp message.
The first meeting among the BGMEA, Sidley and other officials concerned was held virtually yesterday, attended by tariff commission and Economic Relations Division (ERD) representatives.
"The BGMEA wants to ensure that the government representatives should also kindly be in sync with the private sector's engagement with Sidley so that a common view can be developed," said Huq.
"Sidley Austin will help the BGMEA with framing the grounds based on the government's extended Everything But Arms (EBA) engagement request," she said.
Bangladesh has been trying to have its current GSP status extended past 2027 as the domestic economy was severely ravaged from the fallouts of Covid-19.
Bangladesh has been lobbying with the EU through an LDC group under World Trade Organisation (WTO), with the commerce ministry having already sent a letter seeking 10 more years past 2024.
Being the country's largest trading bloc, the significance of the EU market is demonstrated by the rise of its share in Bangladesh's total exports, which has increased from 58 per cent to 61 per cent in the past 10 years
Meanwhile the country's total garment export increased from $12.49 billion in FY2009-10 to $27.95 billion in FY2019-20.
Bangladesh's garment sector will lose $4 billion in export to the EU after the graduation and even if the standard GSP can be availed, the loss will amount to $3.2 billion, according to a recent study by the BGMEA.
The dependence of Bangladesh's exports on zero-duty benefits of the EU's GSP has grown by 9.03 per cent in the past 10 years to $17.15 billion, the study said in November last year.
Currently, some $25 billion or 73 per cent of external trade of Bangladesh enjoys duty-free access for the LDC status, which will come to an end as the LDC graduation takes effect with the economic growth of the country.
To become eligible for the EU's GSP Plus criteria, Bangladesh will have to ratify and effectively implemented 27 international conventions on labour rights, human rights, environmental protection and good governance.
In FY 2011-12 apparel export to the EU stood at $ 11.38 billion, which increased to $21.13 billion in FY2018-19, meaning an 86.6 per cent increase in the last 7 years, the study said.
The EU is currently reviewing its GSP scheme for 2023 which will be finalised soon.