Get ready to win a bigger share of the EU export market: experts

Bangladesh must prepare to grab a bigger share of the European Union’s export market, as China could lose 8-10% of its share in the next few years due to global geopolitical changes, said said an economist yesterday.

As such, Bangladesh should comply with the EU’s new Generalized System of Preferences (GSP), which requires improving human rights, labor rights and environmental protection, in order to benefit from this facility, according to MA Razzaque, research director of the Policy Research Institute.

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For example, 25% of companies in Germany prefer to follow environmental, social and governance criteria for sourcing goods from other countries, Razzaque said.

Currently, Germany is Bangladesh’s largest export destination in the EU and the second after the United States.

Trade tensions between the United States and China have triggered changes in the global geopolitical scenario and some countries like Bangladesh have benefited as work orders shift from China, the world’s largest exporter of garments, to other countries.

Sectors other than clothing should also be more compliant to grab a bigger share of the EU market under the new GSP scheme, which will come into effect from 2024 and run until 2034, added Razzaque.

Razzaque was speaking during a virtual discussion titled “Towards a Transformed and Revitalized Trade and Economic Partnership with the EU”, co-hosted by Friedrich Ebert Stiftung and Research and Policy Integration for Development.

Researchers, university professors, analysts, economists, heads of trade bodies, senior government officials and experts participated in the discussion.

Principal Commerce Secretary Tapan Kanti Ghosh said Bangladesh is already reaping the benefits of global geopolitical changes as the country receives more orders, especially in the garment sector.

For example, Bangladesh’s exports to the United States topped $10 billion for the first time last fiscal year, when the industry saw 60% growth, Ghosh said.

While Bangladesh’s exports to the United States are increasing, the shipment of goods from other countries to the same market is showing a negative trend, he added.

Bangladesh negotiated with the EU to extend the trade benefits offered by the GSP facility, as the country was badly affected by the fallout from Covid-19.

Along with Bangladesh, other least-developed countries (LDCs) requested an extension of the zero-duty trade benefit for another six years at the 12th WTO Ministerial Conference in Geneva in June this year.

Developed and developing countries are expected to grant at least a three-year extension of the trade advantage to exiting LDCs at the next WTO Ministerial Conference to be held next year.

“Thus, if the three-year extension is granted, Bangladesh could enjoy the benefit of zero duty for the EU until 2031 or 2032, when the country aspires to be an upper-middle-income nation,” Ghosh said.

If the country becomes an upper-middle-income country, it will have to sign free trade agreements (FTAs) with the EU, as policymakers from major trading blocs have recently suggested such deals, he added. .

Currently, seven sub-committees under the Prime Minister’s Office are working to prepare the country for its LDC graduation by 2026.

While moderating the discussion, Mustafizur Rahman, Distinguished Fellow of the Center for Policy Dialogue, said the EU is an informed partner of Bangladesh that has supported the country since it gained independence.

In different negotiations such as those conducted in the framework of the World Trade Organization and other platforms, the EU always stands with Bangladesh.

The EU has long called for improvements in areas such as child labour, labor rights, human rights and environmental protection, which are also necessary for Bangladesh’s vision.

“So EU-Bangladesh relations should go beyond trade and investment,” he said.

Delwar Hossain, professor of international relations at the University of Dhaka, said Bangladesh must maintain its current growth momentum.

Bangladesh needs to prepare not only for LDC graduation but also for policy reforms, said Mostofa Abid Khan, former member of Bangladesh Trade and Tariff Commission.

Amena Mohsin, another professor of international relations at the University of Dhaka, said Bangladesh needed to sharpen its negotiation skills given the changing geopolitical and geostrategic relations around the world.

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