Measures taken to tackle LDC challenges 

The government has taken initiatives to identify incentives which encourage direct exports and the sectors which are subsidised with cash incentives.

The government has also initiated to identify all the subsidies that will not be compatible with the relevant provisions of WTO after the LDC graduation. Recommendations are being made on what to do in respect of these subsidy activities.

The government undertook the initiatives aiming to remain prepare for the upcoming challenges after country’s graduation from the Least Developed Country (LDC) status in 2026, according to the finance ministry.    

This responsibility has been given to the Study Group on Subsidy under the Internal Resource Mobilizatinn & Tariff Rationalizaton, formed for the preparation, planning, implementation and monitoring of Bangladesh’s transition from a LDC.

Bangladesh will lose duty-free and quota-free benefits which it is enjoying at present after the LDC graduation. The country’s current export privileges will also decrease.

However, there is a risk of reduced revenue as a result of entering into such trade agreements. At the same time, existing cash incentives and subsidies on exports that are inconsistent with WTO rules should be phased out after the graduation and exports should be encouraged by alternative means instead.

Bangladesh enjoys several benefits under WTO. Notable among them are Preferential Market Access, Duty Free Quota Free, Rules of Origin, Trade Related Intellectual Property Rights (TRIPS) and benefits received under various agreements of WTO as a LDC country.

Md Hafizur Rahman, director general of WTO Cell under the commerce ministry, said that Bangladesh won’t be able to pay subsidy in many sectors due to different regulations after graduation from the LDC category.

“The government has taken the measures for early preparations to find alternative ways for these sectors,” he said.      

Earlier, Commerce Secretary Dr Tapan Kanti Ghosh on Tuesday acknowledged that the country’s impending LDC would present new challenges as well as opportunities for the economy, reports United News of Bangladesh.

The commerce secretary said the public and private sectors must work together to address the LDC graduation challenge.

“There is no option but diversification of products and exports to overcome the graduation challenge and to develop trade,” he said adding that, “The government has taken various steps for ease of doing business and all the ministries and agencies of the government are working together.”

Bangladesh is now scheduled to officially become a developing country in 2026 as the country has met all the three eligibility criteria for the graduation involving per capita income, human assets index (HAI), and economic and environmental vulnerability index (EVI).

United Nations (UN) included Bangladesh in the LDC group in 1975, the country’s poverty rate was 83 per cent. The rate of poverty declined over the years before the pandemic devastated jobs and income opportunities for many.