Bangladesh to see 21.2pc decline in exports to EU: RAPID
The RAPID chairman noted that while duty on exports from Vietnam to the EU is being withdrawn gradually under the FTA, Bangladesh will be facing increased duty on its exports due to graduation from the LDC group
Bangladesh is undergoing the process of graduating from the least developed country (LDC) status to a developing one. Meanwhile, Vietnam signed a free trade agreement with the European Union (EU).
Against such a backdrop, Bangladesh may register a 21.2 per cent decline in its exports to the European market, which may drag down its gross domestic product (GDP) by 1 per cent, according to a research by the Research and Policy Integration for Development (RAPID).
The research findings were disclosed at a programme titled “European Union-Vietnam free trade agreement: Impact on Bangladesh's Export Competitiveness” at a hotel in Dhaka on Wednesday.
RAPID chairman Mohammad Abdur Razzaque delivered the keynote speech. He highlighted the potential implications of Vietnam’s FTA with the EU and Bangladesh's impending LDC graduation.
Due to the FTA, the flow of foreign direct investment (FDI) increased in Vietnam, and it is expected to rise further. It will mostly benefit their textile and ready-made garment (RMG), posing a major predicament for Bangladesh, since it is a major competitor in the market.
RMG products account for 85 per cent of total exports of Bangladesh. The RAPID chairman noted that while duty on exports from Vietnam to the EU is being withdrawn gradually under the FTA, Bangladesh will be facing increased duty on its exports due to graduation from the LDC group.
Bangladesh will retain duty-free access to the EU market for three years following its LDC graduation in 2026, but it will eventually face increased tariffs upon completion of the particular timeframe.
Both the realities are concerning for Bangladesh as around 48 per cent of Bangladesh’s total exports go to the EU. The post-graduation duty-free timeframe might be extended to some extent if the authorities take initiatives in this regard.
Shahriar Kader Siddiky, the secretary to the economic relations division (ERD), attended the programme as the chief guest, while Felix Gerdes, the resident representative of Friedrich-Ebert-Stiftung (FES), delivered the welcome speech.