FROM PAGE B1

Trade Organization (WTO) cover 955 tariff lines, including 763 agricultural and 192 non-agricultural products. Tariffs on 60 of these lines were higher than the bound rates set when Bangladesh joined the WTO in 1995.

The National Board of Revenue (NBR) began tariff rationalisation in phases in FY23, following recommendations from a committee formed in 2021 to prepare for LDC graduation challenges.

In the past two years, tariffs on 60 items have been brought within bound rates based on those recommendations.

A related study also called for a review of supplementary and regulatory duties, noting that Bangladesh would need to compete without relying on import protection after graduation.

The study found regulatory duties on 3,565 tariff lines, about 47 percent of the total, ranging from 3 to 35 percent. Nearly 95 percent of revenue from regulatory duties comes from just 250 tariff lines.

Based on the recommendations, the NBR scrapped regulatory duties on 282 items between FY23 and FY25 and removed minimum import prices on 50 items.

Speaking on the implications of the country’s scheduled LDC graduation this year, trade policy expert Mostafa Abid Khan said that oversight was limited while Bangladesh remained an LDC, but that would change.

“But once we graduate, we will come under surveillance.”

He said the transition would not automatically force Bangladesh to change its policies, but verification from trading partners would increase.

He pointed out two immediate risks. These are exceeding agreed tariff limits on a small number of products and maintaining minimum import prices.

“In some cases, not many, only for a limited number of products, our bound tariff rates have already been exceeded,” said Khan.

He said, “Another issue is the minimum import value or minimum import price system. That cannot be maintained. It will not be allowed.”

He said Bangladesh must gradually lower protection and prepare industries for competition under future trade agreements.

M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, said Bangladesh’s post-LDC challenge will centre on a sharp loss of trade competitiveness with the ending of preferential market access.

He said the impact of higher tariffs will largely depend on productivity and efficiency in the economy.

“Competitiveness comes from productivity, lower costs of doing business, and logistics efficiency, including speed to market,” he noted, adding that Bangladesh is currently weak in both productivity and competitiveness.

He also warned that the pharmaceutical sector will come under pressure after the loss of TRIPS-related flexibilities, particularly due to limited API production, weak backward linkages and patent constraints, which could push up medicine costs.

Reaz stressed that long-term reforms are essential, especially investment in skills, technology adoption, logistics and trade facilitation.

“Ideally, these reforms should have started five years ago, but they did not. We are still ignoring them. But this is a golden opportunity, and I would say almost the last opportunity.”

He said reforms should begin gradually from the next budget cycle, rather than being delayed or introduced abruptly after graduation.

Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said that the timing of graduation, whether soon or later, does not change the need for preparation.

“Whether LDC graduation happens in November or three years later, the government should identify the programmes needed and allocate resources accordingly,” he said.

Like Reaz, Razzaque highlighted the need for infrastructure and logistics reforms.

“Important infrastructure will be needed, and we must clearly define what is required. Implementation of the logistics policy will be essential, with clear responsibilities and timelines,” he added.

Calling for a structured approach, he said the transition should be guided by clear milestones.

“There should be a roadmap for what we want to achieve in the next one year, and in the next two years. A priority list has been prepared, and if implemented effectively, it could be a positive step,” he added.