Dhaka urges EU to relax new GSP criteria
At a joint commission meeting attended by top EU diplomats in Dhaka yesterday, Economic Relations Division officials also urged the EU to consider adopting flexible rules of origin (RoO) criteria, saying it is “extremely difficult, especially for capacity-constrained countries graduating from LDC status.”
Bangladesh has requested the European Union to consider revising its new (draft) GSP scheme, particularly the safeguard clauses, so that all exportable products including ready-made garments can avail of the trade privileges beyond 2029.
At a joint commission meeting attended by top EU diplomats in Dhaka yesterday, Economic Relations Division officials also urged the EU to consider adopting flexible rules of origin (RoO) criteria, saying it is "extremely difficult, especially for capacity-constrained countries graduating from LDC status."
An ERD official present at the meeting told TBS that the EU representatives assured they would consider the demands proposed by Bangladesh, including GSP and the climate fund.
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Bangladesh, set to graduate from the least developed country (LDC) status in November 2026, will continue to access the existing duty-free privileges under the current GSP (generalised system of preferences) and EBA (Everything But Arms) schemes until 2029 as the EU grants an additional three-year transition after graduation.
For continued trade benefits beyond that period, Bangladesh can apply for the new GSP+ scheme which comes with tougher eligibility criteria requiring Bangladesh to add more domestic value to its products and meet human rights, labour and environmental standards.
With the new GSP regime and its safeguard provisions deferred until the end of 2027, the EU could consider a waiver from these safeguard measures on Bnagladesh's textiles and clothing, Economic Relations Division (ERD) Secretary Shahriar Kader Siddiky said at the meeting.
Safeguard measures built into the EU GSP scheme, if unchanged, will not let Bangladesh continue with duty-free market access to clothing products, he pointed out in his presentation, seen by TBS.
Bangladesh should not be penalised for its lack of export diversification and its impressive developmental progress reflected in LDC graduation, he insisted.
"It is also unfair that some non-LDCs can access GSP+ facilities for apparel products, while a graduated LDC like Bangladesh will be excluded," the ERD secretary said, making Bangladesh's point stronger for accessing trade preferences in future in the country's largest export market that has been enjoying duty-free market access for "everything but arms" in Europe since 2001.
"It is also unfair that some non-LDCs can access GSP+ facilities for apparel products, while a graduated LDC like Bangladesh will be excluded."
Moreover, Siddiky argued that since Bangladesh is already a large supplier under the EBA, allowing it to continue with GSP + without measures is unlikely to cause any disruptions.
The 12th session of the Bangladesh-EU Joint Commission in Dhaka was co-chaired by Siddiky and Paola Pampaloni, deputy managing director of the European Union's diplomatic service.
The head of the EU Delegation in Bangladesh, Ambassador Michael Miller, along with other EU diplomats, were also in attendance.
An ERD official present at the meeting told TBS that the EU representatives assured that Bangladesh's proposal will be presented to the EU Parliament, where a final decision will be made.
Requesting to review the flexible rules of origin (RoO) criteria in the GSP+ provisions, the Bangladesh side said the current requirements of double transformation in apparel exports and 50% domestic value addition in non-apparel items are "quite stringent" given the value-chain-led current global trading system where countries specialise in just one or a few components.
The EU could consider a single stage transformation for Bangladesh's RMG products and a 30% value addition for other products, for the GSP+ scheme, the ERD secretary said.
Over the years, EU officials in a series of meetings with Bangladesh's authorities emphasised the urgency of improvement in rights and environmental issues to qualify for the new scheme.
At yesterday's meeting, Bangladesh officials said all the relevant 32 international conventions have already been ratified, and sought the EU's technical and financial assistance to implement those.
They also expected the EU's technical cooperation in the areas of export diversification, boosting competitiveness, expanding investment and improving logistics to make Bangladesh's LDC graduation smooth and sustainable.
Since the EU has so far offered unilateral trade preferences and become Bangladesh's largest export destination, many of the potential challenges related to LDC graduation can be significantly mitigated by continued preferential market access even after LDC graduation, they argued.
The ERD secretary referred to Bangladesh's renewed stride for massive reforms in the financial sector which requires more foreign loans in concessional terms and conditions.
To avoid usual delays in processing project loans, Bangladesh is now preferring budget support to address ongoing needs, he said, stating that budget support accounted for $2 billion of the total $9.89 billion Bangladesh received in foreign loans in the last fiscal year (FY24) ended in June. Loans and grants from the EU were $172m in FY24.
Good governance, control of inflation and consumption expenditure, employment generation and poverty alleviation are among the areas where major intervention is needed, Siddiky listed, stating the interim government's priorities.
