Taking Bangladesh’s LDC graduation seriously
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The global economy is certainly going through a extreme and prolonged health insurance and economical crisis inflicted by the Covid-19 pandemic. Like other developed and developing economies, Bangladesh has also been seriously damaged by the pandemic.
Earlier in the entire year, the shutdown of economical activities to support the spread of the virus led to massive socio-economic consequences which resulted in a lack of jobs and a consequent increase in poverty levels. Export receipts plummeted in March-May 2020 but produced much better than expected results during June-July 2020.
However, returning to a robust growth trajectory in a sustainable manner will depend on how fast the global economy recovers from the ongoing pandemic-induced recession in the leading economies on earth.
For Bangladesh, there can be an additional burning issue which is its upcoming graduation from the group of least developed countries (LDCs). Prior to the coronavirus pandemic hit the global economy, Bangladesh was preparing to graduate from the band of LDCs in 2024 with the expectation that it'll meet the required requirements for LDC graduation at the United Nations triennial review which is scheduled to be held in 2021.
The recent official data seems to suggest Bangladesh’s registering a much more robust economic performance in comparison to most global economies and if this will continue being the case at the time of the UN triennial review next year, it is probably that Bangladesh will qualify for graduation from the band of LDCs in 2024.
Given its impending graduation, Bangladesh must be well prepared to tackle any likely adverse consequences due to LDC graduation, particularly with regards to the export sector. Apparel exports, that have single-handedly propelled export growth, are under pressure as a result of global economic downturn.
The increased loss of duty-free preferences in lots of different markets following graduation in 2024 -- such as Australia, Canada, India, Japan, the EU, and the united kingdom -- would put extreme pressure on Bangladesh’s competitiveness. Therefore, as the global economy recovers from the pandemic, restoring and sustaining a robust export performance will be a critical element in ensuring Bangladesh’s smooth LDC graduation.
As export diversification is a long-standing challenge, the imminent LDC graduation requires unleashing the export potential of various promising export sectors while sustaining as well as perhaps even expanding the export of readymade garments (RMGs). Moreover, graduation also demands that engagement with the country’s trading partners is expanded and strengthened.
It really is in this context that the Bangladesh Enterprise Institute (BEI), an independent and non-profit think tank, which works closely with the private sector and policy-makers on trade policy and development issues, has published a substantive report which details evidence-based policy inputs to cope with the challenges of LDC graduation, specifically with the problems of export diversification and export competitiveness.
The publication, Navigating New Waters: Unleashing Bangladesh’s Export Prospect of Smooth LDC Graduation, is founded on a detailed analysis of several key issues that have to be given serious attention in the run up to graduation.
The study, which was undertaken by a team of economists led by among Bangladesh’s leading trade economists, Dr Abdur Razzaque, highlights the country’s impressive export performance over the past decade right before the advent of the global pandemic.
The report makes a detailed analysis of long-standing challenges linked to external competitiveness and export competitiveness and how these challenges should be addressed. In this context, the analysis has made insightful comparisons of Bangladesh using its main competitors such as for example China, India, and Vietnam.
The book examines four major export destinations -- the EU, the united states, India, and China -- with a view to considering various options to market Bangladesh’s exports in these markets after its LDC graduation. It explains various existing provisions such as duty-free market usage of the EU, India, and China, and possible transition strategies. The analysis also provides various routes by which the trade partnership with the united states can be strengthened.
One salient feature of the publication is a comprehensive analysis of the export potential and prospects in six selected sectors: Leather, plastic, furniture, pharmaceuticals, jute, and services, and the policy support required to expand exports in these sectors.
For each of the sectors, the research shows the export prospects in the global market on a country-wise basis; how Bangladesh is faring with other competitors; regions of bottlenecks for an improved export response, and how certain policies might help in expanding exports in each of these sectors. The analysis draws on inputs and recommendations from industry experts and specific policy recommendations.
Given the graduation timeline, Bangladesh must take the relevant issues seriously. We hope that this publication could make a meaningful contribution to the policy discourse by identifying and combining the most pressing issues which require urgent attention.
Amongst the many ideas in the book, it has been pointed out that currently, only the EU allows an additional three-year transition period after graduation. This means that Bangladesh can continue steadily to enjoy the market usage of the EU until 2027 even if it graduates in 2024. Bangladesh should, therefore, build relationships other important preference-granting countries such as Australia, Canada, China, and Japan, urging them to check out the EU model of offering a protracted transition period.
Another important recommendation manufactured in the report is that since India continued to offer the same market usage of the Maldives even following the latter’s LDC graduation, through a specific article under SAFTA, Bangladesh should enter negotiations with India seeking the same concessions following its graduation as an LDC.
Overall, the publication has submit several practical policy options and suggestions in working with the emerging and evolving circumstances arising from Bangladesh’s impending LDC graduation. It is now vital that you debate and discuss these advice and craft an in depth export strategy within the framework of a medium-term plan within the period 2020-2030.
Along with the lack of preferential market access, Bangladesh will also lose a great many other policy concessions that it currently enjoys as an LDC. Therefore, it really is of immense importance to consider the way the available policy space can be best utilized over the next few years to develop a fresh policy framework targeted at meeting all the challenges the united states will face after its graduation from LDC status.
While it is correctly understandable that both the government and the private sector are preoccupied with coping with the impact of the Covid-19 pandemic on the economy, it is important that the preparations for LDC graduation are not neglected.
While some people assume that Bangladesh should choose to delay LDC graduation, as yet there's not been any change in the state position. Suffice it to state, that along with mitigating the Covid-19 induced consequences, preparation for LDC graduation cannot afford to be positioned on the backburner.
Collectively, the country’s think tank community could be a way to obtain useful support for policy-makers in charting a future course of action to make sure a smooth and sustainable LDC graduation. It is important to recognize that Bangladesh seriously lacks capacity in matters associated with trade policy, trade negotiations, and implementation-related issues.
Rather than lose any more time, work should commence immediately on creating a comprehensive, coherent, and implementable policy framework addressing the multiple challenges that Bangladesh will face in the lead up to LDC graduation and the decade thereafter.
Source: https://www.dhakatribune.com
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