Experts suggest nine-year extension of DFQF market access to the EU
European Union Ambassador to Bangladesh Rensje Teerink said Thursday that Bangladesh needs to follow the core issues related to GSP+ facilities in detail because “GSP+ will probably be the way forward” in the post-LDC period.
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, she said.
Teerink said this while delivering her keynote speech at a virtual dialogue titled “Bangladesh-European Union Relations: Prognosis for the Future.”
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 and 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 (PRI) Dr Zaidi Sattar, Professor at the 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 that date.
Ambassador Teerink said some progress needs to be made on labour rights.
The EU provides possibly the best possible deal in duty-free quota-free (DFQF) market access for products particularly for the apparels — some 45% of Bangladesh's total export goes to the EU.
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 is 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.
Bhattacharya said there is a proposal at the World Trade Organization (WTO) on behalf of the LDC group to extend the DFQF facility by up to 12 years.
“I say three years is very low and 12 years may look very long. But nine years is must,” he said, adding that they are asking for an extension of the leeway period reasonably beyond three years.
Rubana Huq said the new GSP scares the industry because many of them are not linked to what goes on there.
“It becomes increasingly difficult for them to be that compliant,” she added.
On product diversification, Huq said Bangladesh, unfortunately, does not support value addition and it is still stuck to limited products.
Responding to a question, Huq said they are trying to diversify but for the last five years, they have been just going to different trade fairs and pitching better products, but nobody seems to be interested.
“So, we have to get them interested in these better products,” she said.
Zaidi Sattar said the EU has been Bangladesh's main supporter through trade — not aid — and that is an important point to make and he hoped that this continues even after graduation in 2026.
The economist said whether Bangladesh gets GSP+ 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,” Sattar further said.
Explaining why 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,” he said.
Talking about WTO agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), Bhattacharya said if Bangladesh graduates in 2026, it will not enjoy the pharmaceuticals waiver under the TRIPS 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 waiver extension for graduating Bangladesh to enjoy the remaining period if not beyond.
Talking about GSP+, he said Bangladesh is one of the rare countries that has made good use of the international support measures.
So, Bhattacharya 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,” he added.
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,” Bhattacharya said.
He said Bangladesh needs to prepare itself if the country 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 will 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 regarding the DSA [Digital Security Act], involuntary disappearances of people, and create an inclusive civil society space,” he said.
Bhattacharya also said Bangladesh needs to take note that this is the EU, and they value standards, human rights and good governance.
He also said the EU has a pro-climate action approach which is very important for green transformation both in mitigation and adaptation.