Lobby trading partners for duty benefit after LDC graduation

Bangladesh should lobby its major trading partners, including China, Japan, India and the European Union, to safeguard duty privileges for export growth once it leaves the group of least developed countries (LDCs), believes a leading entrepreneur.

By 2050, the Asian region will possess 50 per cent of the world's wealth and Bangladesh should also focus more on its markets like China, Japan and India, said Syed Nasim Manzur, managing director of Apex Footwear, yesterday.

"I have not opened franchise retail shops in Madrid, London and any country in Europe. But last month I opened a franchise retail store at Kathmandu and I have a plan to open three more such stores in Nepal next year," he said.

Manzur also said he would do the same gradually in Sri Lanka and India for his belief of Asian markets being the future of business for Bangladesh, thanks to their substantial consumer base.

"However, we will also have to secure the EU markets definitely as this trade bloc is the largest export destination for our country," he said.

Manzur was addressing a virtual discussion on "Rise of Geo-economics and Bangladesh", organised by the Economic Reporters Forum (ERF), Fredrich Ebert Stiftung (FES) and the Research and Policy Integration for Development (RAPID).

Bangladesh's middle-class consumers total 3.5 million who are the main strength of the economy. So Bangladesh is also a major market for other countries, he said.

Bangladesh should use this reasoning in different trade deals to secure advantages once it makes the status graduation from a least developed to a developing country in 2024 he suggested.

For this purpose, Manzur suggested forming a trade negotiation office comprising officials from the National Board of Revenue, Bangladesh Bank and the commerce, foreign and other relevant ministries.

Former foreign secretary Humayun Kabir echoed him. He suggested undertaking measures to secure American markets as it was the single largest export destination of Bangladesh.

This includes lobbying the Biden administration to revive the suspended Generalised System of Preferences (GSP) status for Bangladesh, as US Congress might soon take up a new GSP scheme following the expiry of the current one today.

Bangladesh will have to be smarter to avail the trade opportunities after the graduation as the global trading system is more complex now, especially since the Regional Comprehensive Economic Partnership (RCEP) was signed last month.

For instance, the strategic relationship between China and Japan was not so warm. However, both China and Japan are signatories to the RCEP. The same could be said for China and Australia, he said.

Nihad Kabir, president of the Metropolitan Chamber of Commerce and Industry (MCCI), backed Manzur.

She also suggested for greater coordination among ministries, trade bodies and government departments for more understanding on trade negotiation.

For instance, Bangladesh should have been called to join the RCEP since it has a strong consumer base, but it was unfortunately not even invited to the negotiations, she said.

"We have to improve our skills and we have to take the advantages of global trade," said Kabir.

The tax administration needs to be reformed to be more integrated with global trade and investment as a high import duty to safeguard revenue generation might isolate Bangladesh and turn into an impediment to joining any big trade deal, she said.

If Bangladesh wants to meet the global aspiration in trade, it needs to improve its skills, education and governance system, added Kabir.

Presenting a keynote paper and replying to journalists' queries, RAPID Chairman MA Razzaque advocated for the lobbying, especially so that the EU does not withdraw trade privileges for Bangladesh all in one go following the graduation.

For instance, the EU will grant Bangladesh a three-year grace period up to 2027 before taking the graduation into account to impose a nearly 10 per cent duty on the country's exports, he said.

Bangladesh should suggest a gradual imposition of the duty, by an annual 2 per cent, he said.

By this time, Bangladesh will also be eligible for signing free trade agreements (FTA) with the EU, considering the time and difficulties faced in inking such deals. Similar steps should be taken for the UK, as Britain is coming out of the EU, said Razzaque.

However, Bangladesh should be very judicious in signing FTAs with any country. The country need not make a mad rush for it, he said.

For instance, China has pledged more than $27 billion in foreign direct investment (FDI) for Bangladesh but so far only $2 billion has materialised. But the opposite has occurred in case of Vietnam and Myanmar, he said.

China invested more than $28 billion in Vietnam, far less than what it had promised, while $6 billion in Myanmar, he said.

Commerce Secretary Md Jafar Uddin said the government was targeting to sign either FTAs or preferential trade agreements (PTAs) with 11 countries soon. Bangladesh will sign a PTA with Nepal soon as a similar one was inked with Bhutan on December 6, he said.

The government has targeted to export $5 billion worth of ICT products and services in the next five years, he said.

It has been working to export another $10 billion worth of halal food, which will offset the annual export earnings of $7 billion after graduation, he added.

Commerce Minister Tipu Munshi said the government has been delaying signing FTAs to safeguard generation of revenue from import duties, which was a major source of government income.

The government is also working to improve skills and education in specific areas like leather, ICT and plastic goods by undertaking projects, he said.

The minister expressed hope for businesses to make a rebound for the Covid-19 vaccine now being available in the market.

ERF President Sharmeen Rinvy, General Secretary SM Rashidul Islam, RAPID Executive Director M Abu Eusuf and FES Resident Representative Tina Blohm also spoke.