Bangladesh’s Apparel Exports to the EU: Adapting to Competitiveness Challenges Following Graduation from Least Developed Country Status
Mohammad A. Razzaque and Jillur Rahman | 2019
Summary
Bangladesh is likely to graduate out of the group of least developed countries (LDCs) by 2024. While this represents a major transition in terms of its development, demonstrating the country’s impressive socio-economic achievements, it also gives rise to concern about potentially sizeable costs due to the resulting loss of access to various support measures associated with LDC status. The most important consequence will be forgone EU trade preferences, taking advantage of which, among others, Bangladesh’s export-oriented apparel industry flourished, creating direct employment opportunities for 4 million people – most of whom are women. This paper focuses on the EU market to analyse the potential implications of LDC graduation for Bangladesh’s apparel exports. By using a partial equilibrium model, it estimates that discontinuing tariff preferences could lead to a potential export loss of more than US$1.6 billion. While the methodological approach employed in this paper has certain caveats, there is no denying that terminating duty-free access in the EU, resulting in a tariff hike of 9.6 per cent, will put serious pressure on Bangladesh’s export competitiveness. This paper gathers several buyers and exporters’ perceptions to provide insights into the issues and offers some broad recommendations to mitigate any adverse effects.
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