Key takeaways from keynote presentation
Bangladesh also can face a likely 20% decline in exports to the European Union if it fails to implement smartly timed and efficient insurance policies, especially in comparison to its shut opponents, acknowledged consultants and entrepreneurs at a dialogue nowadays (27 November).
Moreover, the nation’s upcoming graduation from Least Developed Country (LDC) house also can further late export convey, they acknowledged.
Study agency Study and Coverage for Pattern (RAPID), with crimson meat up from German organisation Friedrich Ebert Stiftung (FES), organised the match titled “The EU-Vietnam Free Change Agreement: Implications for Bangladesh’s Export Competitiveness”.
In a keynote presentation, Abdur Razzaque, chairman of RAPID, acknowledged, “As a outcomes of Bangladesh’s transition from LDC house and the European Union’s Free Change Agreement with Vietnam, the nation’s exports to the EU are projected to decline by 20%.”
He further acknowledged the combined outcomes of larger tariffs following LDC graduation and Vietnam’s a quantity of commerce ideas are anticipated to vastly affect Bangladesh. These components also can doubtlessly carve attend the nation’s atrocious home product (GDP) by 1%.
At repeat, Bangladesh enjoys responsibility-free market access under the Generalised Machine of Preferences (GSP) facility. Alternatively, following its graduation from LDC house by 2026, this facility will expire.
To mitigate the challenges posed by the LDC transition, the RAPID chairman suggested several ideas, similar to negotiating reduced tariff will increase for 3-5 years post-LDC graduation and attaining eligibility for GSP+ benefits.
The opposite ideas are pursuing free commerce and investment agreements to blueprint international command investment and embellishing industrial competitiveness to toughen Bangladesh’s put in global markets.
The economist acknowledged if Bangladesh transitions to the Same outdated GSP scheme, its attire exports will face a median tariff of 9.5%, leather-basically based totally mostly items 7% and processed meals 5.8%, in comparison to the current zero-responsibility benefits.
“Even if Bangladesh qualifies for GSP+, the safeguard measures under the drawing near EU GSP regime also can render its clothing exports ineligible for any preferential treatment, subjecting them to the Most Favoured Nation (MFN) tariff of 12%,” he added.
The RAPID chairman highlighted the reality that the EU-Vietnam Free Change Agreement (EVFTA) gifts a predominant predicament to Bangladesh’s export competitiveness within the European market.
Below the EVFTA, the EU straight eradicated duties on 71% of its tariff strains, with the closing tariffs scheme to attain zero by 2027. By 2023, Vietnam’s exports to the 27-nation bloc had bigger than doubled those of Bangladesh, despite both countries starting with the same export values in 2002.
Alternatively, Bangladesh has maintained its lead over Vietnam in attire exports, basically because of its heavy reliance on the field, whereas Vietnam’s export portfolio is vastly extra a quantity of.
Below the EVFTA, export duties on textiles, attire and shoes will more than seemingly be phased out over 3-7 years, with tariffs on sensitive items being eradicated by 2027. Tariffs on non-processed runt will more than seemingly be eradicated straight, while pangasius (catfish) tariffs will more than seemingly be progressively eradicated interior three years, he added.
Agreeing with the RAPID chairman, Abu Sayed Belal, commerce counsellor on the EU Delegation to Bangladesh, acknowledged, “Vietnam has adopted efficient insurance policies that transcend correct market preferential access. The nation has utilized predominant policy reforms to streamline processes, which had been instrumental in attracting bigger ranges of FDI.”
He added that Bangladeshi exporters are announce material with their export efficiency, while local manufacturers accumulate pleasure from a highly safe home market because of responsibility measures. Alternatively, this protectionism discourages innovation and chance-taking, undermining Bangladesh’s competitiveness within the global market.
Belal’s advice used to be that Bangladesh must always prioritise regional connectivity and repair extra commerce agreements with its trading partners. To give up this, the nation’s financial mannequin must evolve beyond protectionism to embrace bigger competition and innovation.
Fazlee Shamim Ehsan, govt president of the Bangladesh Knitwear Producers and Exporters Affiliation (BKMEA), acknowledged while Bangladesh’s export convey also can decelerate, the total export volume is now not actually to decline.
He renowned that labour shortages in China and Vietnam, coupled with workers’ reluctance to witness RMG jobs as prestigious, also can shift orders to Bangladesh.
Alternatively, he emphasised that Bangladesh faces predominant challenges in developing a enterprise-pleasant environment, citing points with banking facilities, inconsistent gasoline and electrical energy gives, and certain authorities insurance policies that hinder convey.
Anowar Hossain, administrator on the Bangladesh Garment Producers and Exporters Affiliation (BGMEA), raised the same concerns about the standard and reliability of vitality present, which remains a predominant predicament for exporters, notably within the textile industry. Many manufacturers face inefficiencies because of persistent gasoline shortages.
He also criticised the National Board of Income (NBR) for now not extending bonded warehouse facilities to furnishings exporters, which restricts export diversification and bounds convey alternatives in rising sectors.
Masrur Reaz, chairman of Coverage Alternate Bangladesh, highlighted the immediate adjustments in global regulations and user preferences, stressing that extinct enterprise practices will now not retain convey.
He also renowned that the continuing commerce battle has created novel enterprise alternatives for Bangladesh, despite likely US policy shifts post-Biden administration.
The economist entreated reforms and innovation to spice up global competitiveness, pointing out, “Aside from policy crimson meat up, political and financial reforms are predominant to increasing export competitiveness.”
Ayesha Akhter, additional secretary of the Free Change Agreement (FTA) branch on the commerce ministry, renowned that the “finest that it’s likely you’ll well perhaps also converse different” to tackle the challenges of LDC graduation is to signal an FTA with the EU.
She added that the Bangladesh authorities is actively working on the topic and has assessed the feasibility of FTAs with 28 countries, including China, Japan and Indonesia. Diverse discussions had been held with likely commerce partners.
