Replacing the Generalised System of Preferences (GSP) in the Developing Countries Trading Scheme (DCTS) of the UK could be a game-changer for Bangladesh, especially to speed up non-garment export sectors if the right policy support can be assured.
Under the new scheme, Bangladesh will enjoy free market access as a least-developed country even after Bangladesh graduates from the LDC category in 2026. The country will continue enjoying the same benefits in the UK market until November 23, 2029.
Experts were speaking at a seminar titled “Expanding and Diversifying Exports to the UK Market” held in Dhaka on Thursday.
The seminar was co-organized by Research and Policy Integration for Development (Rapid) with support from the UK’s Foreign, Commonwealth and Development Office (FCDO).
Mohammad Abdur Razzaque, chairman of Rapid said they project apparel exports to the UK will be worth $11 billion by 2030 from $4.5 billion in FY22 and non-RMG exports will be worth 0.7 billion to 1.3 billion by 2030.
“But there are potentials for much higher non-RMG export growth in the UK,” Razzaque added.
Regarding DCTS, the chief guest of the event Tapan Kanti Ghosh, senior secretary of the Ministry of Commerce said: “Our exporters are well informed about the EU GSP but have limited information about DCTS of the UK. They can take most of it with proper information.”
While discussing tariff rationalization, he further added that Bangladesh relies on import tariff revenue, which is important for meeting the government expenditures like education, health and social protection.
Thus, tariff rationalization will create a challenge to ensure these expenditures.
“Moreover, sometimes our entrepreneurs ask for protection from foreign products getting into the local market, which we cannot deny,” he added.
“However, after 2026, Bangladesh needs to lower the tariff rate and therefore, our exporters need to be mindful of the increasing competition,” he further said.
Regarding the shrinking market access, the commerce secretary said: “We are negotiating with countries to secure favourable market access.”
He also said: “We were unaware of the open account payment issues and will work with Bangladesh Bank to solve the problem.”
Regarding DCTS, Rapid informed that the trading scheme will offer Bangladesh more generous UK Rules of Origin (RoO) requirements, a minimum value-added requirement for LDC non-garment products of 25% (down from 30% under GSP), relaxed and liberal product-specific rules, extended cumulation facilities and the removal of requirements to ratify and implement certain international conventions.
Rapid’s analysis of Bangladesh’s current production and export structures, competitive advantages, comparator countries’ specializations and market shares in the UK has identified leather goods and footwear (with export growth of 10%), light engineering (bicycle export growth of 7%), agro-food and agro-processed products (with an export growth rate of 29%) and fish and shrimp as the most promising sectors.
These sectors should be able to unleash their export potential with the right policy support.
Mohammad Abdur Razzaque, chairman of Rapid presented the keynote presentation.
In his presentation, he said: “It is still unsettled if Bangladesh’s garment exports after LDC graduation will continue to receive duty-free market access in the EU. However, under the Developing Countries Trading Scheme (DCTS), Bangladesh apparel exports will continue to get duty-free access in the UK.”
He also informed that Bangladesh exported leather goods and footwear worth $1.7 billion in 2021-22. Leather footwear alone is 80% of this export.
The UK, on the other hand, imported $5.3 billion worth of leather goods in 2021. Among them, Bangladesh’s market share was only 0.7%.
Duncan Overfield, deputy development director at FCDO discussed the necessity of relevant policy reforms for Bangladesh that will best serve the country. He said: “Bangladesh must explore the necessary policy options and support to ensure the best utilization of UK DCTS, mostly after the LDC graduation period.
He questioned whether there are other sectors besides the four already identified, such as the pharmaceutical sector, where India appears to be performing strongly.
Duncan further believes that the perception of goods originating from Bangladesh will become more positive over time, much like how the perception of products from Hong Kong and China changed over the years.
AHM Ahsan, vice chairman and CEO of the Export Promotion Bureau (EPB) said: “Export diversification is one of the priority areas we are working on. However, we need to go a long way.”
He also discussed key improvement areas such as maintaining SPS, ensuring proper packaging, improving the country’s perception and meeting consumer demand to tap the unutilised export potential to the UK market.
Md Faizul Islam, chairman of the Bangladesh Trade and Tariff Commission said: “Both Public and private bodies need to work together to ensure export diversification.
Regarding the tariff structure of Bangladesh, he further stated: “High import tariffs work as disincentives for consumers as well as producers. The government is working on tariff rationalization.”
