The report that the European Union (EU) is going to engage more intensely with Bangladesh to facilitate bilateral trade and investment is heart warming. Since the EU is Bangladesh's biggest export trade partner, any prospect of further enhancement of business relations with it needs to be exploited to its fullest extent. The reason is simple, as already 62 per cent of Bangladesh's apparel products and about 56 per cent of all its exports are destined to Europe. So, every effort including the reported fresh move made through the European delegation's proposal to the commerce ministry to hold the Business Climate Dialogue (BCD) in the original spirit of the initiative undertaken in 2016 should be continued.
Most importantly, the issues including investment promotion, removal of trade barriers and improvement of business climate should be high on the agenda. On this score, to facilitate imports from EU as well as to draw more investments from the economic bloc, various tariff and para-tariff barriers need to be removed. Also, as noted by the EU delegation, the cap on the investments in the service sector should be withdrawn. At the same time, steps have to be taken to fully implement the bilateral agreement on avoiding double-taxation and enforce the laws related to trade and investment.
Evidently, for an economy hungry for Foreign Direct Investments (FDIs), the EU's move to expand business with Bangladesh should be greeted with due enthusiasm. Hopefully, the policymakers would be able to make the most of this opportunity. While pursuing the effort to boost bilateral trade through dialogue, the government needs also to use the opportunity to place its most pressing concerns before the EU delegation. Obviously, the question is, if Bangladesh will be able to enjoy the duty-free and quota-free access of its products to the EU market even after it graduates from its current status as a Least Developed Country (LDC) to a middle-income economy by 2026.
More to the point, Bangladesh needs to ensure if it would then qualify for the 'GSP plus' facility that EU has introduced for low-income and low middle-income non-LDCs. Notably, GSP plus is a special incentive arrangement for sustainable development and good governance. Under this arrangement vulnerable low- and lower middle-income countries that implement 27 international conventions relating to human rights, labour rights, protection of the environment and good governance enjoy waiver of tariffs up to hundred per cent. Put differently, will Bangladesh be entitled to benefit from Everything But Arms (EBA) arrangement until 2029 after it is no more an LDC after 2026?
It is to be noted that EBA is a special arrangement for LDCs providing them with duty-free and quota-free access to EU market for all products except arms and ammunition. But under the new GSP plus policy of EU to be put in place in 2023, the question would arise if Bangladesh may continue to be an-EBA beneficiary. However, some vulnerability criteria set by the EU are required to be met by the exporting countries to qualify for the revised scheme of GSP plus. Bangladesh's high dependence on apparel products for export is definitely an aspect of its vulnerability. But everything will depend on how convincingly it is able to make its case before the EU authorities. At this point, the country's policymakers will be required to devise appropriate strategies to approach the EU so that it may extend the preferential market access to our exports even after Bangladesh leaves the LDC group.