From The Business Standard
27 October, 2022, 10:30 pm
Last modified: 27 October, 2022, 10:33 pm
Charles Whiteley, ambassador and head of Delegation of the European Union to Bangladesh, believes a Free Trade Agreement (FTA) between the EU and Bangladesh is unlikely anytime soon despite a lot of interest among the country’s businesses on continuing the duty-free facility after Bangladesh’s graduation from the least developed country status.
“An FTA is not going to happen in the foreseeable future. Why it is not going to happen is because the degree of complexity, the wide-ranging nature, the development stage of our trade relations with Bangladesh is not yet at the stage of any genuine interest on the EU side to negotiate an FTA,” he said at a seminar on Thursday.
He also raised the question if European businessmen are getting the same kind of benefits in Bangladesh that Europe gives to Bangladeshi businessmen.
The Research and Policy Integration for Development (RAPID) organised the dissemination seminar on “Strengthening Bangladesh-EU Trade and Economic Cooperation: Issues and Policy Priorities” at a hotel in the capital.
Alongside government and business sector representatives, representatives from various development partners attended the discussion.
Bangladesh is going to graduate from LDC in 2026. After that, for another three years, till 2029, it will enjoy duty-free export facilities to EU countries.
At the seminar, representatives from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) requested Europe to extend the facility for another three years, till 2032, considering the prevailing global situation.
“We recently visited Europe and requested the representatives there to extend this facility for another three years,” said Vidiya Amrit Khan, director of BGMEA.
BKMEA Vice President Fazlee Shamim Ehsan echoed the BGMEA director.
However, Charles Whiteley indicated that an expansion of the facility is unlikely.
He said Bangladesh will no longer have LDC status after 2026 and a three-year transition time is long enough for their business and government to adjust to the new reality of not being an LDC.
“That means that you are no longer eligible for duty-free, quota-free access to the EU market.”
He also highlighted the hurdles of a Spanish company in doing business in Bangladesh and said, “For example, our Spanish friends from the EU are quite frustrated about how their company was treated here.”
Since Bangladesh will not automatically qualify for duty-free, quota-free market access to the EU, he suggested the focus politically, financially and economically has to be on the GSP Plus.
Although Bangladesh is supposed to not get duty-free benefits under the EU’s Generalized Scheme of Preferences after LDC graduation, there is an opportunity to get duty-free benefits under GSP Plus. But the EU’s existing policy excludes apparels, a key export product, from the facility, which must enter there by paying a tariff of more than 11%.
MA Razzaque, chairman of RAPID, who presented the keynote paper at the seminar, said as a potential major beneficiary of the EU’s GSP Plus, if Bangladesh does not get this facility, then the significance of this facility will be zero. He requested the EU to take this matter into consideration.
Sharifa Khan, secretary of the Economic Relations Division, echoed similar sentiments.
“Why is tariff on RMG more than 11% in the EU countries while the global average tariff rate is lower? Is it to put this sector under pressure? The matter needs consideration,” she stated.
Govt preparations on FTA not enough: Businessmen, economists
Businessmen and economists say despite talking about preparations for an FTA for a long time, no such preparation is visible from the government.
“If complexities in business and corruption are not removed or if there are no facilities like infrastructure, the countries that are ahead in compliance will not want to do FTA with us. If they do not get equal benefits, why will they enter into an FTA? But there is not much time,” Md Fazlul Hoque, managing director of Plummy Fashions Ltd and a former BKMEA president, told The Business Standard.
He said, as per current policy, there will be no GSP or GSP Plus facility.
“If there is no FTA after this, our exports will definitely face a big challenge because we now export at zero tariffs. And from 2029, we will have to pay more than 11% duty, while Vietnam will enjoy zero duty facility,” he added.
Mostafa Abid Khan, a renowned international economist, noted that the main condition vis-a-vis FTA is reciprocity. They won’t enter into an FTA unless they find their benefits.
“Although it has been said for a long time, we have not brought about reforms regarding ease of doing business, intellectual property rights, and environment and tariff issues. We don’t have experience of an FTA with any major economy,” he added.
Mostafa Abid Khan said, “If there is no FTA with Europe, if we have to enter by paying tariffs, then our exports will definitely suffer.”
