Bangladesh wants to finalise negotiations on an Economic Partnership Agreement (EPA) with the European Union by 2028, aiming to secure duty-free access to its largest export destination in the post-LDC period, Commerce Secretary Mahbubur Rahman said yesterday.
The negotiations are yet to start, but the government is preparing to initiate the process, he said at a seminar on the Bangladesh-US tariff issue organised by the Bangladesh Institute of International and Strategic Studies (BIISS) at its office in Dhaka.
For all latest news, follow The Daily Star’s Google News channel. The secretary said the highest level of the government has given approval to start the negotiation process with the EU for signing an EPA.
“It may take three years to conclude the EPA negotiations with the EU. The EU has already assured that it will allow zero-duty trade benefits for Bangladesh up to 2029, three years of grace period as it does for graduating Least Developed Countries (LDCs),” Rahman said.
Noting that 90 percent of Bangladesh’s exports are confined to the EU and the US, he said, “So, the priority is to secure the two markets although the government is trying to expand its market base to other destinations.”
With LDC graduation looming, the government is prioritising signing FTAs with its major trade partners. It has concluded the final round of negotiations for signing an EPA with Japan, with the deal expected soon. The first round of negotiations for signing a Comprehensive Economic Partnership Agreement (CEPA) with South Korea was completed last month.
The commerce ministry sent a letter to the EU last month expressing interest in an FTA and convened an internal meeting for September 29 to discuss the issue, The Daily Star reported last week.
On reducing the trade gap with the USA, the commerce secretary said the government has been constructing warehouses to facilitate the import and sale of US cotton. The annual trade gap between the two countries currently exceeds $6 billion.
Bangladesh has also signed agreements to import 3.5 million tonnes of wheat from the US and is increasing imports of LNG, CNG, soybean, and cotton, he added.
Labour law reforms are also underway in consultation with the International Labour Organization to meet international standards.
Also speaking at the event, Anisuzzaman Chowdhury, special assistant to the chief adviser, said Bangladesh has been preparing for LDC graduation although there are some challenges, including creating national consensus, managing apprehensions, expectations, and transition.
Other challenges include expanding productive capacity, skills, technology, energy, logistics infrastructure, negotiating trade and investment deals, and enhancing state capacity.
Inamul Haq Khan, senior vice-president of the Bangladesh Garment Manufacturers and Exporters Association, said local millers, traders, and mill users have been increasing the import of US cotton, and exports of garment items to the American market are rising following tariff reductions of 20 percent.
BIISS Research Director Mahfuz Kabir recommended transitioning from tariff deals to comprehensive trade agreements, reducing the trade gap, implementing the Labour Action Plan, and lowering tariffs to 15 percent.
He suggested signing a comprehensive FTA with the US and stressed the necessity of a strategy to increase Bangladesh’s export performance and expand market access.
Professor Golam Rasul, Department of Economics, International University of Business Agriculture and Technology, said the key risks for Bangladesh are its heavy reliance on US and EU markets.
IUBAT’s Professor of Economics Golam Rasul highlighted further risks for Bangladesh, including dependence on US/EU markets, the RMG sector’s exposure to high tariffs and shifting rules, and the loss of duty-free access in the post-LDC period.
He suggested market diversification to ASEAN, the Middle East, and Africa, and investment in logistics, ports, energy reliability, and digital compliance to leverage opportunities under the China+1 strategy.