Rationalising tariff regime to boost export

Widening of Bangladesh's export basket further has now become an imperative given that its present export is overwhelmingly dependent on Readymade Garment (RMG) products. Hence is the call for diversification of its exports. An example will suffice to explain the point. In the FY2022-23, Bangladesh exported commodities worth over US$25 billion (out of its total global export worth US$55 billion) to the European Union (EU) market alone.    A single product, RMG, dominated the entire lot of around 2,600 items exported last year to that destination and more than 92 per cent of that was cotton-made. So, it is not surprising that by supplying 35 per cent of EU's import of cotton-made apparel products, Bangladesh holds an enviable position in this area. But that is also somewhat concerning considering that EU's product graduation threshold is 37 per cent for textiles, according to the Article 29 of its (EU's) proposed GSP Plus scheme. And it is also worthwhile to note that the Article 29's stated safeguard measures for textile, agriculture and fisheries would be effective if the share of the relevant product was over 6.0 per cent of total EU imports and exceeded product graduation threshold which is 37 per cent for textiles. But Bangladesh's textile threshold has already crossed 55 per cent according to the proposed GSP plus scheme. So, the time is up for Bangladesh to switch over to new export products and grab the opportunities that the EU's upcoming new GSP scheme might have on offer.

In this context, Bangladesh has got some breathing space given that the new (proposed) GSP plus scheme, which was supposed to come into effect from January 2024 and last till 2034, has not been passed in EU parliament as it could not reach a consensus on the issue. In consequence, the EU has extended the tenure of the existing GSP regulations until December 31, 2027. Against this backdrop, Bangladesh can well make good use of the extra time it has now got on its hands and negotiate with the EU to see if some provisions of the GSP plus scheme could be turned to its advantage and earn up to US$60 billion by 2030 only from RMG exports to the economic bloc. At the same time, it may continue to enjoy the existing duty-free facilities for seven more years and, meanwhile, grab a substantial share of the EU's non-cotton-based imports. In that case, through diversifying its exports Bangladesh could additionally earn US$23 billion only from the EU market, estimates show.

All such issues came under review at a recent workshop held in the city where experts, researchers and journalists dwelt at length on how Bangladesh could explore and exploit the global market to its advantage by diversifying its exports. Unfortunately, the main roadblock to such prospects is coming from within, especially from the protective domestic market. At this point, mention may be made of the high tariff barriers to the import of the necessary raw materials for producing goods as part of the country's efforts towards export diversification.

In particular, the non-apparel products like footwear, leather goods, home textiles, fish and shrimp, to name but a few, hold a high export potential. In order to unleash the country's high and diversified export growth potential, rationalisation of the current tariff regime and, especially, adoption of the National Tariff Policy (NTF) 2023 would prove crucial.