For an economy so heavily dependent on preferential trade, the prospect of LDC graduation has understandably been a source of anxiety in Bangladesh. The latest assurance from the United Kingdom removes much of that uncertainty on at least one critical front. British authorities have confirmed that local exporters will retain their existing market access for three years after graduation and will then move into the Enhanced Preferences tier of the Developing Countries Trading Scheme under which 92 per cent of goods will continue to receive duty-free treatment. More importantly, garments covered by chapters 61 and 62 will retain their existing access while revised rules of origin will allow exporters greater flexibility in sourcing inputs. This is undoubtedly welcome news, particularly since the British market remains a primary destination for Bangladeshi exports. What the decision provides above all is something Bangladesh badly needs as graduation approaches, which is time. Still, this relief is temporary and partial. Preferential access can shield existing exports only for a while, and it certainly cannot make an uncompetitive economy competitive.
The European Union obviously presents a far bigger and more difficult challenge. It accounts for 21.5 per cent of Bangladesh's total goods trade, and nearly 94 per cent of exports to the bloc consist of apparel and textiles. Bangladeshi exporters currently enjoy duty-free, quota-free access under the Everything But Arms arrangement, a preference expected to continue for three years after graduation until 2029. The government is therefore right to pursue a free trade agreement, with formal negotiations expected to begin in September. Complacency, however, has no place in this process. Vietnam already has an FTA with the EU and India is moving towards similar preferential access of its own. European buyers will not continue sourcing from Bangladesh out of habit once competitors can offer comparable products at lower tariffs. The proposed agreement could therefore prove vital to keeping Bangladesh competitive in its largest export market. EU has already made clear what it expects in return including the removal of non-tariff barriers and tangible improvement in the investment climate.
Willingness to meet those conditions on the part of Bangladesh will matter as much as its eagerness to sign. The government is already talking about a national single window and other reforms, but these should not be undertaken merely because European negotiators have asked for them. They are necessary because Bangladesh's own exporters have to contend with these obstacles every day. Complicated customs procedures, regulatory delays, weak logistics and uncertain investment environment increase costs long before Bangladeshi products reach European shops.
The autonomous concession granted by the UK operates on an entirely different premise than the conditional and arduous negotiations awaiting Bangladesh in Brussels. Time has been granted on one front. On the other, it has to be earned and earned from a position already behind competitors who hold what Bangladesh is still negotiating for. The exit from LDC status was always meant to be a testament to economic maturation. If Bangladesh is to gain true economic resilience, its productivity has to rise, new products have to find their way into export markets and businesses have to learn to use the more relaxed sourcing rules. None of that can be achieved when trade policy remains an exercise conducted by the Commerce Ministry alone, disconnected from the industrial planning, infrastructure investment and regulatory reform that determine whether Bangladesh can actually compete. Graduation will only be worth celebrating once those changes produce exporters capable of holding their own in major markets without needing special treatment to survive.
