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Bangladesh - Biz World - September 3, 2021

GSP+ probably to be way forward in post-LDC period

EU Ambassador

9-year extension of DFQF market access in EU market sought

UNB: Head of Delegation of the European Union to Bangladesh Ambassador Rensje Teerink has said, Bangladesh with the graduation needs to follow the core issues related to the GSP Plus in detail because of “GSP Plus will probably be the way forward”.
She said, the current GSP regulation only applies to human and labour rights conventions but the new regulations will be extended to environmental protection and good governance issues.
The Ambassador was delivering her keynote speech at a virtual dialogue titled “Bangladesh-European Union Relations: Prognosis for the Future” premiered yesterday.
Cosmos Foundation, the philanthropic arm of the Cosmos Group, hosted the dialogue as part of its ongoing Ambassador’s Lecture Series.
The opening remarks were delivered by Cosmos Foundation Chairman Enayetullah Khan. The session was chaired by Dr Iftekhar Ahmed Chowdhury, renowned scholar-diplomat and former Advisor on Foreign Affairs of Bangladesh Caretaker Government.
Distinguished Fellow at Centre for Policy Dialogue Dr Debapriya Bhattacharya, former BGMEA President and Chairperson of Mohammadi Group Dr Rubana Huq, founder Chairman of Policy Research Institute Dr Zaidi Sattar and Prof at International Relations Department of Dhaka University Imtiaz Ahmed and Honorary Advisor Emeritus, Cosmos Foundation Ambassador (Retd) Tariq A Karim comprised the panel of discussants.
The EU’s Generalised Scheme of Preferences Plus (GSP+) gives developing countries a special incentive to pursue sustainable development and good governance.
Eligible countries have to implement 27 international conventions on human rights, labour rights, the environment and good governance. In return, the EU cuts its import duties to zero on more than two thirds of the tariff lines of their exports.
The EU Ambassador said the current GSP regulation will expire on December 31, 2023 but there will be a grace period beyond 31st of December, 2023.
Ambassador Teerink said some progress needs to be made on labour rights issues as they are not yet there. “This is really important. We always advocate for Bangladesh.”
The EU provides possibly the best possible deal in duty-free quota-free (DFQF) market access for products particularly for the apparels. Some 45 percent of Bangladesh’s total export goes to the European Union.
Dr Debapriya Bhattacharya sought an extension of the existing DFQF market access for Bangladesh to the European market by nine years beyond the three years of leeway after the graduation.
“We can still enjoy the duty-free quota-free market access after 2026 up to 2029. This has to be extended. It’s a must,” he said as Bangladesh is going to miss out on the LDC category specific preferences and privileges extended by its international development partners.
The economist shared three key points analyzing Bangladesh’s relations with the EU.
These are – an appreciation of EU as a very substantive development economic and humanitarian assistance related part, the future role of EU as a potential actor in the structural transformation of Bangladesh economy particularly in the post-LDC graduation period and the role of EU for creating and enabling global environment for an open economy for Bangladesh to sustain in the future.
Debapriya said there is a proposal at the World Trade Organization (WTO) on behalf of the LDC group to extend the DFQF facility up to 12 years.
“I say three years is very low and 12 years may look very long. But nine years must,” he said, adding that they are asking for an extension of the leeway period reasonably beyond three years.
Rubana Huq said all relevant works are in progress and they are on the right track, just hoping that things will be better.
She talked about the environment and good governance along with the human rights and labour rights and the new GSP which scare the industry because many of them are not linked to what goes on there. “It becomes increasingly difficult for them to be that compliant.”
On product diversification, Rubana said the country concept of Bangladesh, unfortunately, does not support value addition and they still have got stuck in limited products. “Nobody really thinks of sourcing suits from Bangladesh or something better from Bangladesh.”
She said they are not being projected properly because they do not have the means when they lack branding. “I think you could help us actually reach out to the global community and convey the many untold stories of our workers.”
Responding to a question, Rubana said they are trying to diversify but what happens is that for the last five years, they have been just going to different trade fairs and everywhere and pitching better products, but nobody seems to be interested. “So, we’ve to get them interested in our better products.”
Zaidi Sattar acknowledged that the EU has helped Bangladesh’s social-economic progress for so many years and is hopeful that once Bangladesh graduates out of its LDC status, the transition from the EBA to have a more competitive environment for Bangladesh’s exports. “And that will be a smooth transition, rather than the disruption in Bangladesh’s trade.”
He said the EU has been Bangladesh’s main supporter through trade — not aid — and that is the important point to make and they hope that this continues even after graduation in 2026.
The economist said whether Bangladesh gets GSP Plus or just plain GSP, the problem will remain unless Bangladesh simply rationalizes its protective tariff structure which equalizes incentive between export and domestic sales.
“And until we do that, we really would continue to suffer from this export diversification problem, and that is vulnerability and the economic vulnerability that we will not escape until we really put our act together.
Explaining why the overall diversification is not happening, the economist said it is not the fault of the European Union or its regime of market access. “The fault, in a way, lies in our trade policies. We have a trade policy regime that is dualistic.”
Talking about WTO agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), Debapriya said if Bangladesh graduates in 2026, it will not enjoy the Pharma waiver under the TRIP agreement for the remaining seven years after 2033.
“This time period must be given to Bangladesh and should not be penalized for its success and this is a critical issue in terms of economic diversification and production,” he said, noting that there is a need to give that Pharma waiver extension for graduating Bangladesh to enjoy the remaining period if not beyond.
Talking about GSP Plus, he said Bangladesh is one of the rare countries, which has made good use of the international support measures.
So, Debapriya said, by making good use of the international support measures, it should not be deprived of subsequent support. “It should be looked at as a classic case of resilience and structural transformation in making.”
Bangladesh in the post-graduation period has to go through a significant structural transformation and economic diversification.
“So, I see support from the European Union in three major areas — institutional reforms, regulatory competence and productive capacity building,” Debapriya said.
He said Bangladesh needs to prepare itself if Bangladesh wants to take full advantage of the EU benefits as it cannot just negotiate on the diplomatic table without making any change on the ground.
“It’ll have to ensure worker rights, freedom of speech and also access to information, association and others, it has to implement the Universal Periodic Review (UPR) decisions, take note of issues of DSA (Digital Security Act), involuntary disappearances of people, and create an inclusive civil society space,” Debapriya said.
He said it needs to take note that this is the EU, nobody else and they value standards, human rights and good governance. “We’ll have to take these ones very seriously.”
Debapriya said the EU is a great supporter of Bangladesh in the global arena at this very disturbing moment or at this very unsettling moment.
He said the EU has a pro-climate action approach which is very important for green transformation both in mitigation and adaptation.
Ambassador Teerink appreciated Cosmos Foundation’s efforts to host this type of conversation and debate, noting that she is already an Ambassador of Bangladesh.
Dr Iftekhar said he is very pleased that the Ambassador is going to a desk in Brussels which will be a continuation of, in many ways, what she has done in Bangladesh.

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