Bangladesh praying for trade benefits post LDC graduation

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Bangladesh has joined hands with peer least-developed countries (LDCs) to appeal to the World Trade Organisation (WTO) for the continuation of trade benefits they currently enjoy following status graduation to developing nations taking into consideration the pandemic's ill-effect on economies.

All of the LDCs are scheduled to provide their forum at the WTO by 3 September their arguments towards the continuation for some period at night graduation.

Bangladesh has recently sent its group of reasons to the LDC forum favouring the graduation despite the severe damage caused by the pandemic on the economy. Many have called for deferring the graduation for the pandemic losses.

However, the LDCs recommended forwarding the justifications, Sharifa Khan, additional secretary to the commerce ministry, told The Daily Star over the phone.

Chad, a north-central African country that's the coordinator of the LDCs at the WTO, is scheduled to submit the proposals soon, she said.

Once all the LDCs submit their arguments, the draft copy of the demand would be submitted to the WTO, Khan said.

Noting Bangladesh's economical development record, the UN Committee for Development Policy (UN CDP) is scheduled to complete in 2021 the ultimate round of assessment for the country's graduation.

If the UN CDP finds the assessment positive, Bangladesh will graduate to the status of a developing country in 2024.

After the country graduates, all tariff benefits will be lifted. Only the European Union (EU) will allow the tariff benefits for Bangladesh for another three years as a grace period.

That means Bangladesh will love the zero-duty benefit to the EU up to 2027 but also for other countries, the tariff benefits will be withdrawn from 2024.

Currently, Bangladesh as an LDC enjoys zero-duty tariff benefits, preferential trade benefits and regional trade benefit on exports to 38 countries worldwide, 28 which are within the EU.

The other 10 are Australia, Belarus, Canada, Liechtenstein, Japan, New Zealand, Norway, Russia, Switzerland and Turkey.

In lots of other countries such as for example Chile, Brazil and the ones in Latin America, Bangladesh enjoys a significant decrease in duty rates.

Also, in the US, Bangladesh enjoys zero-duty benefit on 97 per cent of its products but unfortunately, the package excludes its main export items like garment.

Due to this fact, Bangladeshi exporters have to face a 15.6 per cent duty on export of apparel what to the American markets. Nevertheless, the US is the single major export destination for Bangladesh.

Bangladesh will face competition in Europe after graduation as Vietnam has already signed a free trade agreement (FTA) with the EU. Some 74 per cent of Bangladesh's export earnings come beneath the preferential trade as an LDC. Of it, 64 % originates from the EU and 10 % from Japan, Canada and the other developed countries.

Bangladesh's export will decline 5.7 % annually if the EU's Everything but Arms (EBA) initiative isn't extended as the neighborhood exporters will then have to face an 8.7 % duty to the EU.

So, there exists a possibility of losing more than $2 billion worth of export business annually after graduation, according to the US Industrial Development Organisation.

It is important to see how the lack of such treatment will impact graduating LDCs, said Roberto Azevêdo, director-general of the WTO, recently in a written report on the "trade impacts of LDC graduation".

The problem has assumed special significance with 25 % of the LDCs on the path to graduation and the associated loss of benefits tied to this status, he said.

The release of this report comes amid the COVID-19 health crisis, which is threatening the lives and livelihoods of folks all over the world, and having a massive impact on economies large and small.

In early April, WTO economists projected a steep fall in trade in 2020, with the key question being the sheer depth of the decline.

The monetary dislocation threatens to reverse hard-won socioeconomic development gains in the LDCs and may potentially delay graduation for a few countries.

"As we monitor the impact that COVID-19 is having on all members, it'll be critical to keeping a close eye on the evolving situation in graduating LDCs," Azevedo said in the report.

It really is worth noting that the analysis in this paper focused on how the graduation would affect LDCs' trade relations, whether that graduation happens as planned or at a later time.

One of the key findings of this study is that the graduating LDCs have diverse economic profiles, with marked differences in export structure, aswell as within their utilisation of -- and reliance on -- preferential market access.

The study explores ways to address these challenges.

It is heartening to note that the reason for graduating LDCs has received due attention from the international community, and governments at the UN and in other fora are exploring measures to aid graduating LDCs to make sure smooth transitions.

The LDC Group in the WTO is pursuing proposals in relevant WTO bodies.

There are instruments and procedures available under WTO rules offering graduating LDCs paths to activate with members and seek recourse should they face any difficulty within their participation in the WTO, the report also said.

Primarily, all the LDCs should demand deferment of the graduation by at least 3 years as the global economy is severely influenced by the pandemic, said Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue.

If the deferment can be done, it'll be better. If not, all the developing and developed countries, including those within the EU, should continue the same trade benefits at least for five years at night graduation, Rahman told The Daily Star over the telephone.

For example, the aid for trade beneath the WTO's Enhanced Integrated Framework and the Technology Bank support for the LDCs have already been granted for five years following graduation.

So, those initiatives will surely bring benefits for the LDCs that will graduate, he said.

Rahman also suggested the continuation of benefits provided to the LDCs by the WTO on pharmaceuticals up to 31 December 2032 in order that Bangladesh's emerging pharmaceuticals industry can grow and expand.

"We wish the developing and developed countries to continue providing zero-duty benefit," said Md Abdul Momen, a professor at the Institute of Business Administration of the University of Dhaka.

The pandemic has intensified the demand, said Momen, also a director of the Bangladesh Garment Manufacturers and Exporters Association, while representing the platform at a meeting on LDC graduation organised by the commerce ministry last month.

All of the developed and developing countries should continue the zero-duty benefit for Bangladesh for at least 10 years in order that the graduated countries could sustain their development.

For example, only the EU allows a three years' grace period to up to 2027. "We demand that the countries extend it for a decade beyond 2027."

This is since the EBA initiative introduced under the EU's Generalised Scheme of Preferences (GSP) in 1968 helped Bangladesh in economic development, employment generation and women empowerment, Momen added.

Developing and developed countries except those beneath the EU usually do not give a grace period, said MA Razzaque, a study director at Policy Research Institute and a noted trade economist.

But this time it is different as a result of the pandemic's impact on the global economy.

Bangladesh and other LDCs should raise their voices in order that all of the developing and developed countries extend the tenures of the preferential trade benefits taking into consideration the financial fallout from coronavirus, he added. 
Source: https://www.thedailystar.net

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