Dhaka calls on EU to relax new GSP criteria

At a joint commission meeting attended by senior EU diplomats in Dhaka yesterday, Economic Relations Department officials also called on the EU to consider adopting flexible rules of origin (RoO) criteria, saying it was “extremely difficult, especially for countries with limited capabilities leaving from the list of LDCs.” status”.

November 05, 2024, 07:45

Last modified: 05 November 2024, 07:55.

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

“>

European flags fly outside the headquarters of the European Commission 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 provisions, so that all exported products, including ready-made garments, can enjoy trade privileges after 2029.

At a joint commission meeting attended by senior EU diplomats in Dhaka yesterday, Economic Relations Department officials also called on the EU to consider adopting flexible rules of origin (RoO) criteria, saying it was “extremely difficult, especially for countries with limited capabilities leaving from the list of LDCs.” status”.

An ERD official present at the meeting told TBS that EU officials had assured that they would consider the demands proposed by Bangladesh, 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 benefits under the current GSP (Generalized System of Preferences) and EBA (Everything But Arms) schemes until 2029 as the EU provides additional a three-year transition period after leaving the EU.

To continue trade benefits beyond this period, Bangladesh can apply for the new GSP+ scheme, which has stricter eligibility criteria requiring Bangladesh to increase the domestic value of its products and respect human rights, labor and environmental standards.

With the new GSP regime and its protective provisions delayed until the end of 2027, the EU may consider withdrawing these protective measures for Bnagladesh textiles and clothing, Economic Relations Division (ERD) Secretary Shahriar Qader Siddiqui said at the meeting.

The safeguards built into the EU’s GSP scheme, unless changed, will prevent Bangladesh from continuing duty-free access to the clothing market, he said in his presentation seen by TBS.

He insisted that Bangladesh should not be penalized for its lack of export diversification and impressive development progress reflected in its delisting of LDCs.

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

“It is also unfair that some non-LDC countries can access GSP+ facilities for garment production while graduate LDCs such as Bangladesh will be excluded.”

Shahriar Qader Siddiqui, Secretary, Economic Relations Department (ERD)

Moreover, Siddiqui argued that since Bangladesh is already a major supplier under the EBA, allowing it to continue using GSP+ without taking action is unlikely to cause any disruption.

The 12th meeting of the Bangladesh-EU Joint Commission in Dhaka was chaired by Siddiqui and Paola Pampaloni, Deputy Managing Director of the European Union Foreign Service.

The event was also attended by the head of the EU delegation to Bangladesh, Ambassador Michael Miller, and other EU diplomats.

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

Asking for a review of flexible rules of origin (RoO) criteria in the GSP+ provisions, the Bangladesh side said the current requirements of double transformation in apparel exports and 50% domestic value addition in non-garment goods are “quite stringent” given the cost of the current chain-based global trading system , in which countries specialize in only one or a few components.

According to the ERD secretary, the EU could consider one-stage conversion of Bangladeshi RMG products and 30% value addition for other products under the GSP+ scheme.

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 a meeting yesterday, Bangladeshi officials said all relevant 32 international conventions have already been ratified and asked the EU for technical and financial assistance for their implementation.

They also expected that EU technical cooperation in the areas of export diversification, increased competitiveness, increased investment and improved logistics would make Bangladesh’s transition out of LDCs smooth and sustainable.

Since the EU has so far offered unilateral trade preferences and has become Bangladesh’s largest export destination, many of the potential problems associated with the LDCs’ exit from the EU can be significantly mitigated by maintaining preferential market access even after the LDCs leave the EU, they argue.

The ERD Secretary mentioned Bangladesh’s new push for major reforms in the financial sector, which requires more foreign loans on concessional terms.

To avoid the usual delays in processing project loans, Bangladesh now prefers budgetary support to meet current needs, he said, saying that budgetary support accounts for $2 billion out of the total $9.89 billion received by Bangladesh in the form of foreign loans in the last financial year (FY24) which ended. in June. EU loans and grants totaled $172 million in FY24.

Good governance, control of inflation and consumer spending, job creation and poverty alleviation are among the areas where serious action is needed, Siddiqui listed as the interim government’s priorities.