Bangladesh is finally moving from being a least developing nation to a developing nation as per United Nations’ Committee for Development Policy (CDP). And as per a Daily Star report, this recommendation will be endorsed by the United Nations Economic and Social Council (ECOSOC) in June this year with the final approval from the UN General Assembly in September. For this recommendation, CDP considered three eligibility criteria including: per capita income, human assets, and economic and environmental vulnerability. Bangladesh met all these requirements in the second triennial review itself with the RMG industry largely contributing to its success.
The robust growth of RMG industry is attributed to its status as a Least Developing Country (LDC). As a LDC, Bangladesh enjoys duty-free market access to the European Union (EU)—under the EU's Generalized Scheme of Preferences (GSP).
LDC graduation to end GSP status
However, its graduation to a developing country will now take away this benefit from Bangladesh. To continue enjoying duty-free market access to the EU, it will now have to attain the GSP Plus status. For this, Bangladesh will have to boost exports of its products qualifying for GSP status, besides ensuring that its three-year average exports of these products do not exceed 6.5 per cent of their total import by the EU. However, apparel imports from Bangladesh accounts for about 9 per cent of EU’s total apparel imports from the world.
Bangladesh therefore, needs to convince EU to increase this threshold to 12-13 per cent by adopting apparel diplomacy. The CDP has also recommended the country be granted five years to transit from being a LDC to a developing nation. During these five years Bangladesh needs to continue apparel diplomacy to confirm the GSP Plus status for post-LDC period.
Apparel diplomacy for fruitful collaborations
The changing global apparel scenario demands a close collaboration between Bangladesh industry and its government. The country needs to form a joint taskforce with the Ministry of Foreign Affairs, Ministry of Commerce, and Bangladesh Garment Manufacturers and Exporters Association (BGMEA) to perform the required apparel diplomacy for attaining GSP Plus.
Bangladesh also needs to move away from its traditional US and EU markets to explore new ones like Japan, South Korea, Russia, Latin American countries, China and India. It can no longer depend on favorable or subsidized trading terms. To survive amongst the fittest, the Bangladesh government and trade bodies need to pursue an active apparel diplomacy that will enable them to form productive partnerships with their largest trading partners.