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Bangladesh pushing for LDC benefits beyond 2024

"One of the fastest growing nations, Bangladesh is looking to becoming a developing nation from Least Developed Country (LDC); however, its tensed economic situation is giving opposite signals. Some economists say, given the country’s rate of progress, it is expected to graduate from being an LDC to developing nation by 2024. The healthy indicator of the country’s socio-economic progress, making it to the league of the developing nations would come at some cost, the cost of losing trade benefits that it currently enjoys. It will have to give away its competitive edge which it was getting owing to many trade privileges."

 

Bangladesh pushing for LDC benefits beyond 2024 002One of the fastest growing nations, Bangladesh is looking to becoming a developing nation from Least Developed Country (LDC); however, its tensed economic situation is giving opposite signals. Some economists say, given the country’s rate of progress, it is expected to graduate from being an LDC to developing nation by 2024. The healthy indicator of the country’s socio-economic progress, making it to the league of the developing nations would come at some cost, the cost of losing trade benefits that it currently enjoys. It will have to give away its competitive edge which it was getting owing to many trade privileges.

United Nations’ resident coordinator in Bangladesh Mia Seppo recently maintained the country’s exports on graduating to developing nation status will face 6.7 per cent tariff, which could result in an estimated export loss of about $2.7 billion in a year. As an LDC, Bangladesh enjoys 12 per cent preference margin for its apparel exports to biggest export destination Europe under the European Union’s Everything but Arms (EBA) Initiative.

The possible fallout

At present, Bangladesh is a major user of duty-free and quota-free market access, with shipments under thisBangladesh pushing for LDC benefits beyond 2024 001 facility accounting for 72 per cent of the total exports in fiscal 2015-16. Upon graduation from LDC, exports will be subjected to additional tariff as duty-free and quota-free benefits from different countries and trading partners will be withdrawn. With this, the preferential market access to more than 40 countries in varying degrees that Bangladesh currently enjoys would be gone on becoming a developing nation. And lastly, as per the United Nations Conference on Trade and Development, Bangladesh’s exports may decline from 5.5 per cent to 7.5 per cent on becoming a developing nation. This list is quite unnerving to say the least, and more so if one is into apparel exports.

If the government on one hand is reportedly working on signing new preferential and free trade agreements with major trading partners, it is also planning to push for enjoying LDC-related benefits for an extended period through various platforms. During a media conference, Secretary of the Economic Relations Division Kazi Shofiqul Azam, stated they are assessing challenges and opportunities after graduation under the high-powered taskforce headed by the Prime Minister’s office. Further this, the taskforce will recommend action plans for off-setting any probable bad impact on overseas trade.

Going by recent measures, it seems Bangladesh will push for LDC-related benefits for an extended period by co-hosting an international event on ‘Supporting Smooth Transition of the LDCs towards a Sustainable Graduation’ during the upcoming ‘High Level Political Forum’ at New York. Commerce Minister Tofail Ahmed says after graduation from the LDC, the country will go for Free Trade Agreements with other countries. By 2021, its export will cross $60 billion and the government will work to achieve the goal.

 
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