REFAYET ULLAH MIRDHA

Bangladesh is pursuing a dual-track strategy to retain duty-free access to the European Union after graduating from the least developed country (LDC) category, negotiating a free trade agreement (FTA) with the bloc while also seeking to qualify for its GSP Plus trade preference scheme.

With the clock ticking towards the end of its LDC trade privileges, businesses say that failing to secure an alternative arrangement could dent the country’s export competitiveness in its largest overseas market and hurt the overall economy.

The stakes are high as nearly half of Bangladesh’s merchandise exports are shipped to the EU. To the European market, they currently enjoy duty-free and quota-free access under the Everything But Arms (EBA) scheme for least developed countries.

The pressure is greater because the two biggest competitors of Bangladesh in the apparel market, India and Vietnam, already have trade agreements with the EU. Once Bangladesh loses its LDC preferences, exporters fear the market peers will gain a further competitive edge.

Bangladesh is scheduled to graduate from LDC status in November this year. The government has, however, sought a three-year postponement, and officials say the response from the relevant UN body has so far been positive.

Even if the graduation goes ahead as scheduled, the EU has agreed to continue its trade preferences for Bangladesh for another three years. That means regular tariffs will come into effect from 2029 under the current timeline.

Studies have estimated that Bangladesh could lose exports worth as much as $17.5 billion a year after graduation, as around 73 percent of the country’s exports currently benefit from LDC-related preferences.

“Eventually, we are heading towards signing an FTA with the EU, but it may take a long time because of the negotiations by both parties,” Commerce Minister Khandakar Abdul Muktadir told The Daily Star over the phone.

Negotiating an FTA, however, is rarely a quick process. India, for example, took around two decades to conclude its trade agreement with the EU.