Given the importance and significance of the EU for Bangladesh’s exports, especially the apparel products, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), in its efforts to get duty-free trade benefits to the European Union extended once the country (Bangladesh) leaves the group of LDCs, has signed an agreement with Sidley Austin LLP — the 11th largest US-based law firm having offices globally with annual revenues of more than US $ 2 billion — to receive advisory services while Head of the EU Delegation to Bangladesh, Rensje Teerink, on her part meanwhile, reportedly stated that Bangladesh will have to comply with the new criteria on human rights to enjoy the benefit on exports.
“Sidley Austin will help the BGMEA with framing the grounds based on the Government’s extended Everything But Arms (EBA) engagement request…The BGMEA wants to ensure that the Government representatives should also kindly be in sync with the private sector’s engagement with Sidley so that a common view can be developed,” said BGMEA President Dr Rubana Huq even as reports suggest Bangladesh garment sector will lose around US $ 4 billion in export to the EU after the graduation and even if the standard GSP can be availed, the loss will amount to US $ 3.2 billion.
The European Union (EU) is a very important export destination for Bangladesh, where around 61 per cent of Bangladesh’s exports are destined, including readymade apparel items (garments accounts for about 85 per cent of the national sales abroad), which rose from US $ 12.49 billion in fiscal 2009-10 to US $ 27.95 billion in 2019-20 (according to a recent study by the Bangladesh Garment Manufacturers and Exporters Association-BGMEA), on the back of the Generalised System of Preferences (GSP) scheme that Bangladesh currently enjoys as a Least Developed Country (LDC).
However, as Bangladesh joins the big league of developing nations in 2024, the GSP facility, a part of which is EU’s Everything But Arms (EBA) initiative under which all imports to the EU from the Least Developed Countries are duty-free and quota-free with the exception of armaments, will come to an end. And as per reports, Bangladesh will have to meet the European Union’s new criteria on human rights to retain its duty-free market access to the bloc even as the EU is scheduled to assess the trade privilege in light of the human rights situation.
Reports has it that Bangladesh garment sector will lose around US $ 4 billion in export to the EU after the graduation and even if the standard GSP can be availed, the loss will amount to US $ 3.2 billion.
It may be mentioned here that on 7 December, the European Council adopted a decision and a regulation establishing a global human rights sanctions regime, which will allow the EU to target individuals, entities and bodies – including state and non-state actors – responsible for, involved in or associated with serious human rights violations and abuses worldwide, no matter where they occurred.
“The new regime enables us to impose sanctions regardless of where human rights violations and abuses occur…,” explained Josep Borrell, High Representative of the EU for foreign affairs and security policy and Vice-President of the European Commission, adding, “…without having to create new, country-specific sanctions regimes as we had to do until now. This means we have new tools to increase accountability and fight impunity.”
The EU can also respond to human rights violations by suspending development aid or withdrawing EBA trade preferences, Borrell said.
“So, Bangladesh needs to protect the EBA facility by complying with the new conditions of human rights,” explained Teerink to the media, adding, “The Director-General Trade and DG Employment of the EU have been closely monitoring the human rights situation in Bangladesh to be assessed for the next eligibility.”
Retaining the trade privilege in the EU is important for Bangladesh because the current economic growth of the country happened significantly riding on the bloc’s generous trade benefit over the last five decades. But, once the country graduates to a developing nation from the least-developed country (LDC) grouping in 2024, Bangladesh will face a lot of competition from other countries in the EU, and there is a possibility of losing the market share due to erosion in preference, the envoy said.
“It is very difficult to say exactly how much Bangladesh would be affected due to graduation,” Teerink said, adding that the EU would remain a major market for Bangladesh even after the graduation.
Bangladesh is said to be the biggest beneficiary of the GSP among all LDCs and is alone utilising 67 per cent of the trade preferential treatment because of higher shipment of apparel items. However, to qualify for the GSP Plus, a country must meet some criteria, including the fact that a potential country must be considered vulnerable — a vulnerable country refers to a nation which is not classified by the World Bank as a high-income or upper-middle income country for three consecutive years — as per a document of the European Commission on the EU’s GSP.
Also, a country must have ratified 27 core international conventions in the fields of human and labour rights, the environment and good governance to qualify for GSP Plus, which is a special incentive arrangement for sustainable development and good governance and, it slashes tariffs to zero for vulnerable low and lower-middle-income countries.
Meanwhile, Bangladesh, along with other LDCs, has been pushing for an extension of the current GSP status for 10 more years because of the fallouts of the Coronavirus pandemic even if Teerink on her part reportedly stated she was not much aware of the EU’s position in this regard.
According to reports, the Sidley lawyers will advise the traders’ body (BGMEA) in preparing arguments and strategies to prolong preferential market access into the EU, with a focus on the ongoing EU GSP reform discussions and BREXIT.
Sidley will be assisting the BGMEA to develop policy briefs to be submitted to the Government so that the perspective of the private sector is clearly communicated to the policy makers, reportedly underlined the BGMEA President Dr. Rubana Huq interacting with the media adding the law firm Sidley Austin LLP is the 11th largest US-based law firm having offices globally with annual revenues of more than US $ 2 billion — services are free of cost under its Trade for Development Initiative, Emerging Enterprises pro bono programme.
“Sidley Austin will help the BGMEA with framing the grounds based on the Government’s extended Everything But Arms (EBA) engagement request,” stated Rubana, adding, “The BGMEA wants to ensure that the Government representatives should also kindly be in sync with the private sector’s engagement with Sidley so that a common view can be developed,” and went on elaborate that the first meeting among the BGMEA, Sidley and other officials concerned has already been held virtually of late, which was also reportedly attended by tariff commission and Economic Relations Division (ERD) representatives.
Being the country’s largest trading bloc, the significance of the EU market is demonstrated by the rise of its share in Bangladesh’s total exports — Bangladesh has been trying to have its current GSP status extended past 2027 as the domestic economy has been hit badly by COVID-19 even as Bangladesh has been lobbying with the EU through an LDC group under World Trade Organisation (WTO), with the Commerce Ministry having already sent a letter seeking 10 more years past 2024 — which has increased from 58 per cent to 61 per cent in the past 10 years.
According to a report, the dependence of Bangladesh’s exports on zero-duty benefits of the EU’s GSP has grown by 9.03 per cent in the past 10 years to US $ 17.15 billion with some US $ 25 billion or 73 per cent of external trade of Bangladesh enjoying duty-free access for the LDC status (which will come to an end as the LDC graduation takes effect with the economic growth of the country) currently.
Meanwhile, even as the EU is reviewing its GSP scheme for 2023, which will be finalised soon, Bangladesh’s apparel exports to the bloc, jumped 86.6 per cent in the last 7 years, from that of US $ 11.38 billion in FY 2011-12 to US $ 21.13 billion in FY 2018-19 and then went on to touch the US $ 27.95 billion mark in FY 2019-20.
The efforts thus put in by the BGMEA to get the duty-free trade benefits to the European Union extended, is seen as a very significant move on which a lot will depend in the days to come, from the industry’s perspective.
Bharat Tex Special Report 2026 
