BGCCI seeks special trade privilege in post-LDC period

Bangladesh's exports are likely to suffer in the European Union (EU) markers in the post-LDC period provided the country loses preferential treatment in the EU countries, M Maksud, President of Bangladesh–German Chamber of Commerce and Industry (BGCCI) said on Thursday (22 June).

He was speaking at the business networking event, organised by the BGCCI,  at a city hotel, reads a press release.

M Maksud, also Managing Director of Corona International, Corona Engineering Limited and Corona Power Generation Limited, said that Bangladesh's exports could face average duties of 8.7% as a result of GSP loss.

"The 'zero duty' access to the EU is expected to continue for three years after the official announcement of 'Developing Country'. If the preferences under EBA (Everything But Arms) are not available after that, the exports of Bangladesh would face 8.7 per cent duty on average," said M Maksud.

And it is estimated that shipments would drop at the rate of 5.7% per year. To mitigate these effects, Bangladesh needs to qualify for the GSP+ scheme in order to preserve its competitiveness in the export market, the BGCCI president said.

GSP+ scheme is a 'special incentive arrangement for Sustainable Development and Good Governance' for 'vulnerable developing countries'. This system grants full removal of tariffs on over 66 per cent of EU tariff lines. To qualify for the scheme, Bangladesh has to ratify 27 international conventions and has to fulfil the 'vulnerability' criteria as set by the European Union. In order to address these concerns, amendments to the existing labour laws, elimination of child labour, registration of trade unions, elimination of backlog in cases of labour laws etc have been given the most emphasis.

Over the past few years, Bangladesh has progressed a lot in terms of economic and social development. However, graduation from the LDC group will be the most important milestone that Bangladesh could achieve in the coming years. But the question remains: Is Bangladesh's trade sector ready to face the challenges after the country graduates from Least Developed Country (LDC) status. Losing preferential market access in many export destinations, most notably to the European Union (EU), seems to be the most challenging aspect of the path after graduation.

The (EU) has been the biggest importer of Bangladesh, accounting for 58 per cent of the country's total exports and 64% of the entire apparel exports. Bangladesh, as a Least Developed Country (LDC), has been enjoying zero tariff benefits from the best possible schemes available under the Generalised Scheme of Preferences (GSP) of the European Union. Bangladesh has been one of the countries that have utilised the EU preferential market access. So, the continuation of tariff preference after LDC graduation is important for Bangladesh in all major markets, particularly in the EU market. Maintaining export competitiveness through preferential tariffs would increase the country's exports. This would contribute to higher manufacturing, higher export earnings, higher employment, women empowerment, and ultimately, reduction of poverty.

The BGCCI said, "Along the same line of Bangladesh's competence and competitiveness in Germany and the EU markets will very much depend on adaptation, implementation and compliance to the German and European Supply Chain Due Diligence Acts, which the BGCCI is keen to learn more about over the course of time and provide appropriate support and services to its members and the exporters of Bangladesh in general so that they continue to remain reliable, competent and competitive partners for the German and European companies in the future."

"As the balance of trade currently is in favour of Bangladesh, the Bangladesh government can consider getting German technologies and services in the field of electricity generation, transmission and distribution, renewable energy, chemicals, electro medical equipment, automobiles as well as engineering services from German companies. The Bangladesh government can also consider buying high-tech critical infrastructure equipment from Germany," which can reduce the trade deficit between these two countries, the BGCCI president said.

"The cooperation between Germany and Bangladesh is at an all-time high as bilateral relations continue to strengthen, " the BGCCI president said.

Bangladesh exported goods worth 7590970863 US dollars to Germany during the July-June period of fiscal 2021-22. During the January-May period of the July-May 2022-23 period, Bangladesh's export to Germany stood at 6403760170 US dollars, according to the Export Promotion Bureau.

Last but not least, "Ease of Doing Business" in Bangladesh for German and European companies remains an area of special interest focusing on the reduction of regulatory and policy hurdles for German companies in Bangladesh. In this regard, we, the BGCCI shall closely work with the Government of Bangladesh and its relevant authorities, the BGCCI president noted.

Jan Janowski, Charge D Áffaires, Embassy of the Federal Republic of Germany in Bangladesh, in his speech, said that Bangladesh should work on improving the business environment to attract German investment.

He said that the improvement in the record of ease of doing business is important in the context of luring FDI in Bangladesh.

Sharing his experience with policymakers, business leaders and stakeholders, Jan Janowski said that Bangladesh has a young, vibrant and innovative population that can contribute to the development of the country. He also hinted that Vietnam, Bangladesh's competitor in the international market, has signed a free trade agreement (FTA) with the EU countries that will give the Southeast Asian country a special tariff privilege in the EU countries.

As Bangladesh has decided to join the BRICS, the German envoy said the total export growth of Bangladesh to Germany over the years is much higher than that of BRICS countries.

Before coming to Dhaka, Jan Janowski said he had watched the economic crisis in Sri Lanka and Pakistan during the corona pandemic and had no clue about Bangladesh. However, Bangladesh's economy did well and contained the challenges coming out of the corona pandemic. 

As Bangladesh's economy is going through some challenging times, the German envoy said that Bangladesh may meet some  IMF suggestions to sustain economic growth.

He said the number of German companies in Bangladesh has increased in recent years showing increased business interest in the South Asian country