Tactical negotiations key to EU trade benefits

Experts at a workshop on Thursday called upon the government to hold ‘technical negotiations’ with the European Union (EU) over new GSP regulations in a bid to deal with any issues as soon as possible.

Bangladesh’s readymade garment (RMG) sector will not get tariff facility in the EU market if the new GSP regulations are implemented there from next year, they said.

The experts made the call at the workshop titled “Identify Issues Relating to the Upcoming EU New GSP Regulations” held at the commerce ministry in Dhaka.

“The Bangladesh government will have to hold ‘technical negotiations’ with the EU immediately as our garment sector will not get tariff facility in the EU market if the new GSP regulations are implemented there from 2024,” said Mohammad Abdur Razzaque, Chairman of Research and Policy Integration for Development (RAPID).

Mentioning that Bangladesh’s apparel market would face serious challenges in the EU market, he said Vietnam will get full tariff facility in the EU market after 2027, but Bangladesh will lose competitive edge as it will be deprived of such facility as per new regulations.

“Trade preferences are critical. We recommend engaging with the EU for flexible terms of preference after the country’s graduation, and request to allow UK-like conditionality for getting GSP+,” he also said.

The economist suggested engaging with Canada, India, Japan, and China asking for an extension of preferences.

In his keynote paper, Abdur Razzaque said as per new rules, any GSP recipient country with a share for the relevant products exceeding 6 per cent will need to be below the 37 per cent threshold import share in the EU GSP-covered imports of the same products.

“Product graduation applies for standard GSP countries and for apparel (S-11b), the proposed GSP 2024-34 reduced product graduation threshold from 47 per cent to 37 per cent of GSP-covered imports.”

As Bangladesh’s clothing export is 50 per cent of GSP-covered imports of the EU, apparel products will be excluded from GSP+ and standard GSP preferences, he said.

“However, Bangladesh will enter into a new structure as the country is graduating from LDC status in November 2026. So, EU and UK markets are very important for Bangladesh.”

Razzaque said that the EU announced its proposed GSP regime for 2024-34. “Graduating LDCs can apply for and obtain GSP+ preferences contingent upon the fulfillment of two criteria such as the country has a non-diversified economy (diversification criterion), defined as a country’s seven largest sections of GSP-covered imports into the EU representing more than 75 per cent of its total GSP-covered imports to the EU.”

“And another is a beneficiary country must ratify and effectively implement 32 international conventions on human rights, labour rights, environmental protection and climate change, and good governance. Bangladesh meets the diversification criterion. But, inclusion to GSP+ depends on complying with 32 international conventions,” he added.

Vice President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlee Shamim Ehsan underscored the need for “political goodwill” to get GSP facility in the EU market.

Moderating the event, additional secretary of the commerce ministry Md Abdur Rahim Khan said they are doing all necessary things to ensure facility for Bangladesh. “But businesses will have to be aware of the activities from their respective sides.”

He added: “We have sent a letter to EU to increase our grace period from three years to six years.”

While speaking at the programme, Senior Commerce Secretary Tapan Kanti Ghosh said Bangladesh is showing a good performance in the apparel export to the US market without any tariff facility.

“So, we have to think how we can improve performance in the EU and UK markets without any facilities. Bangladesh is on the top position in green factories. Now we need to focus on products’ value addition and other issues,” he also added. Bangladesh exported RMG products worth $23 billion to EU in 2022 while $4.75 billion to UK, $9 billion to USA, and $1.49 billion to Canada, according to the BGMEA data.