Graduation ceremony at LDC confronts potential explosive threat from fascist administration, according to commerce advisor
Bangladesh, set to graduate from Least Developed Country (LDC) status in November 2026, faces significant challenges in maintaining its exports, particularly to the European market. This transition will result in the loss of preferential trade benefits, a narrow export base, higher compliance costs, and limited free trade agreements, among other issues.
The challenges are multi-faceted. Graduation means Bangladesh will lose duty-free access to major markets like the European Union (EU) and the UK, providing significant tariff advantages for Bangladeshi exports, especially in textiles and garments. The country remains heavily dependent on ready-made garments exports, lacking the necessary diversification required to compete effectively in global markets without preferential treatment.
Post-graduation, Bangladesh will face increased costs related to meeting stricter labor standards, environmental sustainability (ESG reporting), and intellectual property rights, particularly demanded by the EU market. The country lags behind competitors such as Vietnam and India, who have secured free trade agreements (FTAs) with the EU, UK, and Canada, putting Bangladesh at a disadvantage in market access and competitiveness post-LDC.
Underlying economic challenges, such as depleting gas reserves, financial sector weaknesses, and currency pressures, threaten a smooth transition. Additionally, the risk to affordable medicine exports exists, as Bangladesh benefits currently from TRIPS waivers for pharmaceuticals, which may end after graduation, impacting both exports and global access to affordable medicine.
However, there are potential solutions and strategies to navigate these challenges. Leading business groups and experts have urged the government to request a three to five-year extension to the transition period to better prepare the export sector and economy for post-graduation realities. Actively pursuing FTAs with major markets like the EU and UK is crucial to maintain preferential access or mitigate tariff impacts. Strengthening bilateral trade relations and negotiating new agreements should be prioritized.
Investment in export diversification beyond garments, including sectors like pharmaceuticals, fisheries, livestock (seaweed, swamp eel), and other promising export products, can reduce vulnerability. Enhancing compliance and productivity by investing in labor rights improvements, environmental standards, and intellectual property frameworks to meet international buyer requirements without excessive cost burdens is also essential.
Coordinated policy and reform agenda, aligning political leadership, business stakeholders, and bureaucracy to implement necessary economic reforms and investment climate improvements to sustain growth in a competitive post-LDC environment, is crucial. Strategic government planning, utilising reports produced by economic and investment agencies to guide a "smooth transition" and manage diplomatic efforts linked to trade and investment, is also vital.
While the United Nations graduation timeline appears fixed for November 2026, a tactical approach involving preparation, diplomatic negotiation, and possible transitional extensions could help Bangladesh adapt successfully to its developing country status and protect vital sectors, especially trade with the European market.
In a separate development, Bashir Uddin, Commerce Adviser, described the LDC graduation as a "time bomb." He estimated that Bangladesh aims to export $8 billion to the US, but the greater challenge lies in the remaining $42 billion of exports to the European market. Bashir Uddin also stated that if necessary, the team will visit the US again for ongoing tariff talks. The agreement between Bangladesh and the US government is based on three principles: the unelected interim government cannot bind the next government, the US will cancel the agreement if commitments are not met, and the agreement is not extendable to third countries.
The National Security Adviser, Khalilur Rahman, stated that the agreement negotiated with the US government is revocable by the next elected administration. Khalilur Rahman hinted that US tariffs for Bangladesh might be reduced further. The event organized by the Bangladesh Textile Mills Association (BTMA) was held at the Gulshan Club in Dhaka. BTMA President Showkat Aziz Russell, BGMEA President Mahmud Hasan Khan Babu, and BKMEA President Mohammad Hatem also addressed the event. Bashir Uddin expressed surprise that few are discussing the LDC graduation issue.
- The loss of preferential trade benefits upon graduating from Least Developed Country (LDC) status will significantly impact Bangladesh's textile and garment exports to the European Union (EU) and the UK, as duty-free access will no longer be available, necessitating strategies to maintain competitiveness and preferential access or mitigate tariff impacts.
- Amidst the reported concerns of Commerce Adviser Bashir Uddin about the remaining $42 billion of exports to the European market, the government is urged to actively pursue free trade agreements (FTAs) with major markets like the EU to secure preferential access, align political leadership, business stakeholders, and bureaucracy for necessary economic reforms, and invest in export diversification beyond garments to reduce vulnerability and maintain growth in a competitive post-LDC environment.
