The Committee for Development and Policy (CDP) in its First Triennial Assessment meeting, held at the UN on March 16, cleared Bangladesh's eligibility for graduation from least developed country (LDC) to a developing country. What could be more glorious than this announcement, since Bangladesh was once despised by Henry Kissinger as "bottomless basket"? Now this is the moment of truth - Kissinger was wrong. It's indeed an occasion for rejoicing and celebration.
In the recent months, the intelligentsia, think-tanks, civil society members and professionals spread conflicting views about Bangladesh's capability to surmount the challenges ahead.
Unquestionably, Bangladesh will lose benefits of LDCs in terms of Duty-free, Quota-free (DFQF) market access; non-compliance of Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) flexibilities and patent protection for pharma products. Export subsidy will have to be stopped. Because of loss of such benefits upon graduation, Bangladesh will definitely face challenge in terms of competitiveness in the global market. However, during the transition phase, Bangladesh will continue enjoying preferential market access under the World Trade Organisation (WTO); longer transition to implement WTO agreements; flexibilities regarding WTO rules; and priority to delivering technical assistance.
Interestingly, Bangladesh will lose benefits only after Second Triennial Assessment in March, 2021 by CDP. Then, it will get a transition time for three years, meaning Bangladesh will continue with all benefits till 2024. The European Union (EU), the largest trading bloc for Bangladesh, will allow another three years (until 2027) for transition. Thus Bangladesh will get 5-8 years to be fully prepared to brave the challenges of LDC graduation.
Bangladesh and other LDCs have been claiming "supply side constraints" - pertaining to infrastructure, sea and land ports, technology, capacity building, etc., the main obstacles to their competitiveness and seeking 100 per cent DFQF, more foreign direct investment (FDI), and technology transfer for export promotion and creating jobs for economic development. The US, the biggest single market for Bangladesh, has not been positive in response to such demands. Bangladesh has, however, not been deterred but exploited benefits of TRIPS flexibilities and particularly DFQF offers (with varied Rules of Origin) of other countries, trading blocs and succeeded to triple its export (US$ 35 billion) within a decade.
Most importantly, Prime Minister Sheikh Hasina created a dream of Middle-Income Country through Vision-2021. It's now a reality.
Graduation will not necessarily pose only challenges. It also offers benefits. It will immediately offer the benefits of credit worthiness, more potential for foreign investment, more predictability to access finance for flagship projects, more investment, job creation and revenue through protection of intellectual property, and above all, pave the way to the membership of the club of developed Economies by implementing Vision 2041.
As developing country, Bangladesh will still have more time to open its economy like other developing countries. But, the challenge is its capability to compete within the framework of developing countries for market access, attracting investment, improving infrastructure and achieve skill development. However, there is always an opportunity to reach out to other countries bilaterally or through WTO Committees to explain the difficulties pertaining to graduation and seek dispensation.
Bangladesh should actively consider to implement its commitments pledged through Trade Policy Review mechanism in WTO (though not compulsory) for its own benefit by improving infrastructure, automation, skills, legal and administrative reforms. Trade Facilitation agreement is also an area to look into as Bangladesh has signed and ratified it.
Simply, Bangladesh needs to improve infrastructure and services of its sea Ports; have at least 1-2 deep sea ports by 2021; diversify its export basket and market; improve conditions for attracting investment both internal and foreign; true implementation of 'one step service'; skill development of human resources; faster but balanced application of technology, ICT and automation in industrialisation and governance; and reduce dependence on one sector (garments) and strengthen 4-5 sectors (e.g. agro processing, leather, ICT, etc.) for development. These are a must.
Bangladesh still has the leverage to continue with its competitiveness, but needs to immediately minimise the cost of production and transportation by improving skill, technology, infrastructure and services.
For the possible challenges, the government has already assigned External Economic Resources Division for Impact assessment; General Economic Division (GED) of Planning Commission to do mapping and prepare Plan of Action, in consultation with all Ministries on top-priority basis. The Ministry of Commerce is also doing its assessment. This is similar to its preparedness for Implementation of Sustainable Development Goals (SDGs) under the leadership of Principal Coordinator of Prime Minister on SDGs.
Most importantly, the business community, led by the Federation of Bangladesh Chambers of Commerce and Industary (FBCCI), has also been sensitised to do their own impact assessment. Think-tanks are also found engaged in preparing 'policy briefs' on different areas of crucial importance for government. All in combination, will definitely strengthen the capacity of the government to understand the enormity of the challenges and address appropriately with a balanced policy and strategy given the limited time of transition.
In a meeting on graduation, organised by FBBCI on March 15, 2018, Abul Kalam Azad. Principal Coordinator (SDG Affairs), Prime Minister's Office, assured the business community on behalf of Prime Minister that the Government will do everything possible to overcome the challenges. 'If Bangladesh could clinch independence within nine months, the government will also succeed within the next 5-7 years', he claimed. Translation of vision 2021 is a true testimony to that claim. And, the people of Bangladesh has legitimate reason to rejoice with the endorsement of UN.
Md. Abdul Hannan is a former Bangladesh Ambassador to the UN (Geneva), UK and Oman.
