Bangladesh is expected to be graduated out of the UN list of the Least Developed Countries (LDCs) by 2018-24 period. The country will, however, continue to be eligible for Duty-Free Quota-Free Market Access (DFQFMA) in the European Union (EU) countries under the EU EBA (Everything But Arms) scheme, three more years up to 2027. So, the question is, what is going to be happen after 2027? There are two possible options for Bangladesh for the post-2027 market access strategy in the EU: first, EU Generalised System of Preference (GSP) or GSP-plus; second, Bangladesh-EU Free Trade Agreement. The `Standard GSP’ grants only duty reduction (not duty free) for maximum 66 per cent of all EU tariff lines. Under the terms of the World Trade Organisation (WTO) this unilateral GSP scheme can be withdrawn any time. So, the ‘Standard GSP’ is neither meaningful in respect of product coverage and margin of preference nor a sustainable option for Bangladesh. Now, the GSP-plus scheme offers duty-free market access to 66 per cent of all EU tariff lines for developing countries who undertake to assume the special burdens and responsibilities resulting from the ratification of 27 core international conventions on human and labour rights, environmental protection and good governance as well as from the effective implementation thereof. The core thing of the GSP-plus scheme is that the applicant country must give a binding undertaking in writing to maintain the ratification of the 27 conventions and to effectively implement them. It must also accept these conventions’ reporting and monitoring requirements without reservation, and must agree to co-operate with the EU monitoring procedure led by the European Commission. In return, the product covered under the scheme is only 66 per cent of all EU tariff lines. The tricky thing here is that GSP-plus scheme with only 66 per cent product coverage imposes a 27 additional bundle of non-tariff barriers (NTBs) based on compliance of 27 core international conventions, which are non-trade in nature and beyond the scope of WTO’s Technical Barriers to Trade (TBT) and Sanitary and Phyto-Sanitary (SPS) and other agreements. It is neither meaningful in respect of product coverage nor a sustainable and predictable option for Bangladesh. Bangladesh should not accept any NTB beyond the scope of the WTO Framework. The United States, EU and other GSP granting countries (including Australia and Canada) have signed and are likely to sign free trade agreements with all global trading partners. These include most of our competing countries like India, Pakistan, Sri Lanka, Vietnam, Cambodia, China, Korea, Malaysia, Philippines and Indonesia in different combinations. It is, thus, important that Bangladesh should also act accordingly.
POST-BREXIT UK: British Prime Minister Theresa May has named India, Canada, China, India, Mexico, Singapore and South Korea among the countries keen on a free trade agreement with the UK post-Brexit era and already agreed to start scoping discussions on trade agreements with Australia and New Zealand. To ensure its trade and economic interests Bangladesh should also act accordingly and take a strong pro-active role in establishing a bilateral free trade arrangement with UK and initiate to form Commonwealth free trade area. The Commonwealth represents one-fourth of the countries of the UN. It has a strong representation in the Caribbean Community; has three members in the European Union (Cyprus, Malta, UK); has two members (Malaysia, Singapore) in the Association of Southeast Asian Nations (ASEAN) and five countries represented in the G20 (Australia, Canada, India, South Africa, UK). The Commonwealth is therefore well placed to influence the policy agenda of some of the most influential institutions in global politics. It is to be noted that Bangladesh’s export to the UK dropped by around 7.0 per cent in the first nine months of the current fiscal year (FY17), to $2.62 billion from $2.82 billion in the same period of last fiscal year. Annual export to the UK was $3.8 billion in the last fiscal year. The decline in export may be attributed to the negative impact of the Brexit or Britain’s exit from the EU. After the Brexit vote, the currency of the UK declined sharply against the major currencies. Earlier, an analysis of the commonwealth secretariat showed that Bangladesh would be the most affected developing countries of the Commonwealth in terms of tariff. As a consequence of the UK’s pullout from the EU, Bangladesh has to pay $400 million additional import duty which is around 11 per cent of the country’s total annual export to the UK. Bangladesh and UK held several meetings in London recently. In these meetings the UK authorities have informed that UK is considering continuing with Everything but Arms (EBA) GSP scheme for LDCs in the post-Brexit UK trade regime. UK side even indicated that post-Brexit UK would be willing to introduce a more trade facilitating EBA-plus scheme. The outline of the proposed UK EBA-plus scheme should include, among others, the following: (a) Along with goods EBA-plus should also grant market access for services trade under GATS LDC Modalities 2003 and GATS LDC waiver 2011; (b) Product Coverage: Everything but Arms; (c) DFQFMA for Everything but Arms; (d) Rules of Origin should be based on value addition criteria (summation of FOB value of exports – summation of CIF value of imports >or = 40 per cent) or Change of Tariff Head (CTH). It may be noted that 100 per cent export products of Bangladesh qualify under the Rules of Origin based on value addition criteria. Moreover, there should be capacity building assistance for: (a) Development of accredited certification system; (b) Transfer of Technology and Compulsory Licensing Measures under the TRIP Agreement; (c) Development of Trade Facilitation measures prescribed in the WTO Trade Facilitation Agreement; (d) Human Resource and Skill Development; (e) Environment and Pollution Control. Bangladesh should also call upon UK to lead and notify its EBA-plus scheme in goods and services as the DFQFMA scheme as adopted and prescribed in paragraph 36 of Annex F of the Hong Kong Ministerial Declaration of the WTO and GATS LDC Modalities 2003 and GATS LDC waiver 2011 in a manner that ensures stability, security and predictability.
