Graduation from LDC

Businesses advised to seek 6-yr transition period for EU GSP continuation

Jasim Uddin | Published: 22:09, May 30,2020


The commerce ministry has advised businesses and other stakeholders to request the European Union to consider a six-year transition period instead of a three-year one for continuation of the GSP facilities after Bangladesh’s graduation from the least developed country status.

The stakeholders are to make the appeal through participation in the EU’s online public consultation on GSP scheme for developing countries, ministry officials said.

The businesses should also seek a relaxation in the rules of origin for six years after graduation and a change in the eligibility criteria for the GSP Plus system so that Bangladesh could become eligible for the scheme, they said.

The EU is conducting the online survey to get the views of stakeholders as preparatory work on framing the next generalised system of preference (GSP) after expiry of the existing GSP scheme in 2023.

The new GSP regulation will come into effect in January 2024.

The public consultation started on March 22 and the last date for feedback submission has been extended till July 15 from the initial June 3 deadline.

The commerce ministry on May 19 issued a guiding note urging the stakeholders to consider the points while responding to the online GSP questionnaire.

It said that countries like Bangladesh would need additional support even after graduation from the LDC status to face the extremely adverse impacts of the COVID-19 pandemic, the wrath of climate change and also to meet the Sustainable Development Goals by 2030.

Bangladesh is supposed to graduate from its LDC status in 2024 and as per the existing provision, the country will enjoy the existing preferential trade benefits for another three years during the transition period.

Currently, EU countries are the destinations of more than 60 per cent of Bangladesh’s total exports thanks to the duty-free and quota-free market access accompanied by the relaxed provision of the rules of origin to the economic bloc.

Graduating countries, including Bangladesh, will face stiff competition from other countries if the facilities are not extended.

In this context, the stakeholders, including the Federation of Bangladesh Chambers of Commerce and Industry, at a meeting held at the commerce ministry on May 19 opined that Bangladesh should seek an extension to the benefits.

The commerce ministry and the foreign ministry have also recently requested the EU to extend the existing facilities considering the impact of the coronavirus pandemic on Bangladesh’s economy, the officials said.

They also said that Bangladesh should request the EU for a phased approach to introduce tariff on exports of graduated countries after their transition period of six years instead of jumping to 12 per cent from 0 per cent.

The tariff can be imposed gradually at 2 per cent per year, they said.

The EU should also change the eligibility criteria such as the import share criteria so that Bangladesh can be eligible for the GSP Plus scheme.

As per the current provision, Bangladesh will not be placed under the GSP Plus scheme due to the import share criteria.

The businesses and stakeholders were also advised to highlight the significant contribution of EU’s GSP scheme in women empowerment, employment generation, poverty reduction, positive changes in labour law, improvements in workplace safety in RMG factories and the risks of losing the trade package.

The ministry urged trade bodies, associations, labour organisations and leading think-tanks to participate in the survey.

The FBCCI has already asked its members to participate in the survey in line with the government’s guiding notes.

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