Promoting UK-Bangladesh trade and prosperity

This week, the UK Prime Minister's Trade Envoy for Bangladesh Rushanara Ali, MP, paid a visit to Bangladesh. During her stay, she met government officials and business and educational leaders to look at how we can further strengthen vital trade and investment ties between both countries.

We will be following up her visit next month with the second UK-Bangladesh Trade Dialogue – a chance to address market access and trade issues in detail.

The UK and Bangladesh have deep political and economic ties and trade has increased significantly over the last two decades. Bangladesh's economy has gone through major structural shifts with exports, including to the UK, playing a catalytic role in developing the manufacturing base.

The country's share of manufacturing and exports has risen dramatically since the 1990s, and this has mostly been driven by Bangladesh's remarkable success in exporting ready-made garments. Bangladesh now plays a pivotal role in the supply chains of iconic British companies including Marks & Spencer, Next and Primark.

With the robust progress achieved over the last few decades, Bangladesh is set to graduate from the least developed country (LDC) status by 2026. This is a huge achievement. Maintaining momentum over the next decade will depend on export diversification and the UK is keen to expand and diversify its trade with Bangladesh.

Bangladesh's apparel exports to the UK alone were worth almost $4.5 billion in the 2021-22 fiscal year, accounting for approximately 9.5% of Bangladesh's total ready-made garment exports. We hope that fish, home textiles, jute, leather and handicrafts can follow the dominant textile and apparel sector as exports to the UK.

As the UK is leaving the GSP, we are enhancing our efforts through the new Developing Countries Trading Scheme, which will come into effect early this year. Bangladesh will be a major beneficiary of this generous scheme. 

We also hope to see increased UK exports to Bangladesh in the service sectors where we are most competitive, including higher education, financial services, healthcare, and aerospace. Opening up the Bangladeshi market would support the overall competitiveness of the economy and offer world leading services to Bangladeshi consumers.

Through the European Union's Generalised System of Preferences (GSP), the UK provided duty-free, quota-free access for goods from Bangladesh on everything but arms and ammunition.

As the UK is leaving the GSP, we are enhancing our efforts through the new Developing Countries Trading Scheme (DCTS), which will come into effect early this year. It is one of the most generous schemes in the world and Bangladesh, with its highly competitive export industries, will be a major beneficiary.

The DCTS will improve Bangladesh's access to the UK market by extending lower tariffs and simpler rules of origin requirements for exporting to the UK. This means Bangladeshi businesses will have more flexibility in sourcing raw materials, including from other developing countries, and treat it as originating from Bangladesh.

The scheme will contribute to Bangladesh's integration into the global economy, creating stronger trade and investment linkages and partnerships for the future, and help strengthen supply chains.

With Bangladesh increasingly integrating into the world economy through global and regional supply chains, the scheme will support trade, development and job creation.

Bangladeshi exporters to the UK will be able to use materials from, for example, Kenya and treat finished goods as originating in Bangladesh. This will make it easier for Bangladesh to participate in regional and global supply chains where final goods are destined for the UK.

Flexible rules of origin will mean that more and more Bangladeshi businesses will be able to utilise supply chains and treat products as local when exporting to the UK market.

Examples of specific goods that can benefit from the new scheme are t-shirts, vests and jeans. Over $485 million of annual exports from Bangladesh to the UK consist of t-shirts and vests, and over $215 million consist of jeans, which when imported from Bangladesh, receive a 12-percentage point reduction in import duty compared to the UK Global Tariff rate.

It is not surprising that the top 20 Bangladeshi exports to the UK under GSP are apparels and textiles related. New export items with relatively high export potential include bicycles. Exports from Bangladesh to the UK were around $4.6 million in September 2022 and 65% utilised GSP preferences.

Other new sectors include commercial ships. Bangladesh recently exported a 6,100-tonne load capacity high-speed multipurpose container ship to the UK – the first of its kind.

Trade has always been an important part of the relationship between the UK and Bangladesh. As Bangladesh graduates from the LDC status, the DCTS will help build on this success and expand into the other high-value export sectors that are critical to future progress.

We look forward to working closely together to enhance balanced UK-Bangladesh trade partnerships that will benefit both our countries.

Robert Chatterton Dickson is the British High Commissioner to Bangladesh