Dhaka urges EU to relax new GSP criteria

At a joint commission meeting attended by top EU diplomats in Dhaka yesterday, Economic Relations Division officials also urged the EU to consider adopting flexible rules of origin (RO) criteria, saying it is “extremely difficult, especially for capacity-constrained countries graduating from LDCs. status.”

05 November 2024, 07:45

Last modified: 05 November 2024, 07:55

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

At a joint commission meeting attended by top EU diplomats in Dhaka yesterday, officials of the Division of Economic Relations also urged the EU to consider adopting flexible rules of origin (RoO) criteria, saying it is “extremely difficult, especially for capacity-constrained countries graduating from LDCs. status”.

An ERD official present at the meeting told TBS that EU representatives assured to consider Bangladesh’s proposed demands, including the GSP and the climate fund.

Bangladesh, which will graduate from Least Developed Country (LDC) status in November 2026, will continue to access existing duty-free privileges under the current GSP (Generalized System of Preferences) and EBA (Everything But Arms) schemes until 2029 as the EU grants an additional transition of three years after graduation.

For continued trade benefits beyond this period, Bangladesh can apply for the new GSP+ scheme, which comes with stricter eligibility criteria that require Bangladesh to add more domestic value to its products and meet human rights, labor and environmental standards.

With the new GSP regime and its safeguard provisions delayed until the end of 2027, the EU may consider a derogation from these safeguard measures on Bnagladesh textiles and clothing, said Economic Relations Division (ERD) Secretary Shahriar Kader Siddiky, in the meeting.

The safeguards included in the EU’s GSP scheme, if not amended, will not allow Bangladesh to continue duty-free market access for clothing products, he stressed in his presentation, seen by TBS.

Bangladesh should not be penalized for its lack of export diversification and its impressive development progress reflected in the LDC graduation, he insisted.

“It is also unfair that some non-LDCs can access GSP+ facilities for apparel products, while a graduated LDC like Bangladesh will be excluded,” the ERD secretary said, making Bangladesh’s point stronger for accessing trade preferences in the future on the country’s largest export market. which has enjoyed duty-free market access for “everything but arms” in Europe since 2001.

“It is also unfair that some non-LDCs can access GSP+ facilities for apparel products, while a graduated LDC like Bangladesh will be excluded.”

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

Moreover, Siddiky argued that since Bangladesh is already a large supplier under the EBA, he is unlikely to allow it to continue with GSP+ without measures.

The 12th session of the Bangladesh-EU Joint Commission in Dhaka was co-chaired by Siddiky and Paola Pampaloni, Deputy Director General of the European Union’s diplomatic service.

Also present were the Head of the EU Delegation to Bangladesh, Ambassador Michael Miller, along with other EU diplomats.

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

Requesting the revision of the flexible rules of origin (RoO) criteria in the GSP+ provisions, the Bangladesh side said that the current requirements of dual transformation of apparel exports and 50% domestic value addition in non-apparel items are “quite strict”, given the value- current trade system driven by chains, where countries specialize in only one or a few components.

The EU could consider a one-step transformation for RMG products from Bangladesh and 30% value addition for other products, for the GSP+ scheme, the ERD secretary said.

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

At yesterday’s meeting, Bangladeshi officials said all 32 relevant international conventions had already been ratified and requested the EU’s technical and financial assistance to implement them.

They also expected EU technical cooperation in the areas of export diversification, boosting competitiveness, expanding investment and improving logistics to make Bangladesh’s LDC graduation smooth and sustainable.

As the EU has so far provided unilateral trade preferences and has become Bangladesh’s largest export destination, many of the potential challenges of graduating from the LDC can be significantly mitigated by continued preferential market access even after the graduation of the LDC, they argue.

The ERD secretary referred to Bangladesh’s renewed push for massive reforms in the financial sector, which calls for more foreign loans on concessional terms and conditions.

To avoid the usual delays in processing project loans, Bangladesh now prefers budget support to meet ongoing needs, he said, stating that budget support accounted for $2 billion of the total $9.89 billion received by Bangladesh in foreign borrowings in the last fiscal year (FY24) ended. in June. EU loans and grants were $172 million in FY24.

Good governance, control of inflation and consumer spending, employment generation and poverty reduction are among the areas where major intervention is needed, Siddiky listed out the priorities of the caretaker government.