Bangladesh is likely to lose US$7.0 billion worth of export earnings annually after graduation to a developing nation status in 2024, a government report estimates.
The report said the country could lose the export market, especially in the European Union (EU), Canada, Australia, Japan, India and China.
Bangladesh might also be deprived of the concessional loan benefit from the multilateral and bilateral development partners after its graduation from a least-developed country (LDC) category.
The projections were made at the newly framed Perspective Plan 2021-2041 (PP2041).
The state-run General Economics Division (GED) prepared the vision paper where Bangladesh wants to be a developed nation by 2041.
Based on the simulation results from the global dynamic general equilibrium model, the plan said: "The loss of preferences in the markets of EU, Canada, Australia, Japan, India and China in 2024 might lead to an annual reduction in the total export of Bangladesh by 11 per cent or equivalent to around $7.0 billion given the current projection of export growth."
The vision paper said, "Although the graduation as non-LDC would improve the country's image and rating for attracting foreign direct investments, there will be a number of risk factors."
It said Dhaka would lose its preferential trade benefits in the EU market, the largest business destination of the local garment and textile products.
Besides, many of the exemptions of WTO provisions, including the cut in tariff and subsides, and adherence to the intellectual property rights (especially for the pharmaceutical sector) will no longer be available after 2024, except for the EU, which allowed a transition period up to 2027.
As an LDC, Bangladesh along with its 48 peers currently enjoys duty and quota-free benefits under the EU's Generalised System of Preferences (GSP).
According to the Export Promotion Bureau, Bangladesh earned US$18.70 billion, 51 per cent of total $36.6 billion earnings, making shipment of goods and services to the European markets in the fiscal year, 2019-20.
The vision paper PP2041 said much of the aforementioned perspective benefits are not "automatic" as Bangladesh has to work quite a lot to materialise those.
The paper said though the benefits are not "automatic," almost all of the possible losses would be automatic as soon as the country graduates from the LDC status.
The vision paper has further stated that Bangladesh has to prepare itself over the next seven years to counter or tackle the losses.
GED Member Professor Shamsul Alam told the FE that the division had identified the challenges after the graduation.
It also suggested some action plans and policy reforms for tackling the losses and protecting the export growth.
Economist Dr Ahsan H Mansur told the FE that Bangladesh's only option is to go for bilateral negotiations with the EU countries as well as other key trading destinations like Canada, Australia, Japan, India and China for getting some preferential treatment.
Besides, the government should launch bilateral negotiations with some regional blocs like the ASEAN for tackling its possible export losses after graduating to a non-LDC country, said Dr Mansur, executive director of the Policy Research Institute, a think-tank in Dhaka.
For those negotiations, the country also needed to ensure standard international labour rights and trade liberalisation reducing the higher taxes on import products, he added.
"If we continue our current tax regime very high and strict for our trading partners, they would not be interested to enter into bilateral agreements on offering possible benefits in their markets after our graduation," he said.
