Monirul Alam of DOT
Bangladesh’s income from merchandise exports to European Union (EU) has been estimated to decline by 9.5 percent annually from the year 2024 as an impact of graduation of the South Asian country from the category of Least Developed Country (LDC) to developing nation’s status.
Policy Research Institute (PRI), while disclosing a research outcome at a seminar on Thursday, said that the developing country’s status would implicate tariff imposition on Bangladesh all exports including apparel to the EU region after graduation from LDCs.
Currently, Bangladesh enjoys tariff-free exports to EU region under the EBA (Everything But Arms) Tariff Suspension Programme as a LDC country, it said.
“From the year 2024, EU buyers will need to pay 9.5 percent tariffs on import of goods from Bangladesh. The possible tariff imposition might squeeze unit prices of goods originated from Bangladesh which would result in income decline,” said Dr MA Razzaque, Research Director of PRI, during presentation of the outcome of a recent study titled “LDC Graduation and Apparel Exports to EU” at PRI conference room in the city.
Dr Razzaque said Bangladesh fetched USD 21 billion from exports to EU in 2017-18 fiscal year, out of which, the share of the apparel sector was 92 percent or USD 19.6 billion alone. According to last fiscal’s income, the annual loss in export income would stand at USD 1.6 billion from 2024 every year, he added.
He said the EBA facility has widened the scope of enlarging exports to EU region from Bangladesh. In last few years, Bangladesh’s export grew by 12 percent to EU while average growth of exports from across the world to EU was only 2.4 percent.
He said Bangladesh unrealized income potential from exports to EU region has been estimated to USD 11.3 billion, in addition to existing USD 21 billion.
Dr. Razzaque said Bangladesh needs to initiate several pre-cautionary measures including strengthening of economic diplomacy to negotiate with EU authority fresh trade preference regime or arrange bilateral FTA (Free Trade Agreement), finding alternate strategy to retain EBA or GSP (Generalised System of Preferences) and go for extension of the transformation regime from LDC category to grab unrealized export potentials.
PRI chairman Dr Zaidi Sattar moderated the discussion on the research outcome.
“This is indeed good news for us to get transformed to developing nation. But, bad news in a sense that the country is going to loss trade preferences. We must act early to retain our advantages in exports,” Dr Sattar said.
Dr Shamsul Alam, member of Planning Commission’s General Economic Division, spoke the discussion as chief guest. Stressing the need for revision in existing trade policy of the country, he said Bangladesh’s trade policy needs to be redesigned.
Zillur Rahman, lecturer of economics department of Jagannath University, aided the research.
Among others, former governor of Bangladesh bank Dr Mohammed Farashuddin, retried senior secretary Md. Moniruzzaman, Ambassador Abdul Hannan, Mohammadi Group Managing Director Dr Rubana Huq, former BKMEA President Md. Fazlul Hoque and former advisor to ILO Dr Rizwanul Islam.