Dhaka urges the EU to relax the new GSP criteria

At a joint committee meeting attended by top EU diplomats in Dhaka yesterday, Economic Relations Department officials also urged the EU to introduce flexible rules of origin (RoO) criteria, saying this was “extremely difficult, especially for countries with limited capacity graduating from LDC status.”

November 5, 2024, 7:45 am

Last modified: November 5, 2024, 7:55 AM

European flags fly outside the European Commission headquarters in Brussels, Belgium, September 20, 2023. Photo: REUTERS/Yves Herman/File Photo

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European flags fly outside the European Commission headquarters in Brussels, Belgium, September 20, 2023. Photo: REUTERS/Yves Herman/File Photo

Bangladesh has asked the European Union to consider revising its new (draft) GSP scheme, especially the safeguard clauses, so that all exportable products, including ready-made garments, can benefit from trade privileges beyond 2029.

At a joint committee meeting attended by top EU diplomats in Dhaka yesterday, Economic Relations Department officials also urged the EU to introduce flexible rules of origin (RoO) criteria, saying this was “extremely is difficult, especially for countries with limited capacity graduating from LDCs. status.”

An ERD official present at the meeting told TBS that the EU representatives assured that they would consider Bangladesh’s demands, including GSP and the Climate Fund.

Bangladesh, which will leave its least developed country (LDC) status in November 2026, will continue to have access to existing duty-free privileges under the current Generalized System of Preferences (GSP) and EBA (Everything But Arms) until 2029, as it EU grants an additional three-year transition period after graduation.

To continue to enjoy trade benefits beyond that period, Bangladesh can apply for the new GSP+ program, which comes with stricter eligibility criteria and requires Bangladesh to add more domestic value to its products and comply with human rights -, labor and environmental standards.

With the new GSP regime and its safeguard provisions postponed until the end of 2027, the EU may consider waiving these safeguard measures for Bnagladesh’s textile and clothing products, said Shahriar Kader Siddiky, Secretary of the Economic Relations Department (ERD ), during the meeting.

Safeguard measures built into the EU’s GSP scheme, if left unchanged, will not allow Bangladesh to continue duty-free market access for apparel products, he stressed in his presentation seen by TBS.

Bangladesh should not be punished for its lack of export diversification and its impressive development progress, which is reflected in LDC degrees, he stressed.

“It is also unfair that some non-LDCs have access to GSP+ facilities for garment products while an LDC graduate like Bangladesh will be excluded,” the ERD Secretary said, strengthening Bangladesh’s point for gaining access to future trade preferences in the country’s largest export market. which has enjoyed duty-free market access for “everything but weapons” in Europe since 2001.

“It is also unfair that some non-LDCs have access to GSP+ facilities for apparel products, while an LDC graduate like Bangladeshi will be excluded.”

Shahriar Kader Siddiky, Secretary, Economic Relations Department (ERD)

Moreover, Siddiky argued that since Bangladesh is already a major supplier under the EBA, the country’s continued GSP+ without measures is unlikely to lead to disruptions.

The 12th session of the Bangladesh-EU Joint Commission in Dhaka was co-chaired by Siddiky and Paola Pampaloni, Deputy Director of the European Union Diplomatic Service.

The head of the EU delegation to Bangladesh, Ambassador Michael Miller, was also present along with other EU diplomats.

An ERD official present at the meeting told TBS that the EU representatives assured that Bangladesh’s proposal will be presented to the EU Parliament where a final decision will be taken.

On a request from the Bangladesh side to review the flexible rules of origin (RoO) in the GSP+ provisions, Bangladesh parties said the current requirements of double transformation in apparel exports and 50% domestic value addition in non-apparel items are “quite stringent” are considering the value The chain-led current global trading system in which countries specialize in only one or a few components.

For the GSP+ programme, the EU could consider a single-phase transformation for Bangladesh’s RMG products and a 30% value addition for other products, the ERD secretary said.

Over the years, in a series of meetings with Bangladeshi authorities, EU officials have emphasized the urgency of improving rights and environmental issues to qualify for the new scheme.

At yesterday’s meeting, Bangladeshi officials said that all relevant 32 international treaties have already been ratified and have sought the EU’s technical and financial assistance to implement them.

They also expected EU technical cooperation on export diversification, boosting competitiveness, expanding investments and improving logistics to ensure a smooth and sustainable transition to the least developed countries in Bangladesh.

Because the EU has so far offered unilateral trade preferences and has become Bangladesh’s largest export destination, many of the potential challenges associated with LDC graduation could be significantly mitigated by continued preferential market access even after LDC graduation, they argued she.

The ERD Secretary referred to Bangladesh’s renewed move towards large-scale reforms in the financial sector, which will require more foreign borrowing on concessional terms.

To avoid usual delays in processing project loans, Bangladesh is now preferring budget support to meet ongoing needs, he said. in June. EU loans and grants amounted to $172 million in FY24.

Good governance, controlling inflation and consumer spending, job creation and poverty reduction are among the areas where major interventions are needed, Siddiky said, outlining the interim government’s priorities.