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GSP for Pakistan may not hurt Bangladesh

Both Pakistan and Bangladesh enjoy Generalised System of Preferences (GSP) Plus status from the European Union. And both are strong competitors in the EU apparel market. Bangladesh has been enjoying duty- and quota-free status to the EU since the inception of the trade privilege by the EU in 1971. 

Since Pakistan has been allotted zero-duty benefit for 75 specified products exported to the EU, there is also a possibility of trade diversion from China, India, Bangladesh and Turkey. But this diversion is statistically insignificant. Trade diversion from Bangladesh may take place in T-shirts, jerseys, pullovers, cardigans, waistcoats, men's or boys' cotton suits, women or girls' suits, bedding material of cotton and artificial fiber. But even then Bangladesh is not expected to suffer any major impact on EU garment exports.

There were fears Bangladesh would lose its garment business after the elimination of the multi fiber arrangement in January 2005. But that did not happen and in fact exports from Bangladesh have been increasing since then.