Bangladesh’s export, particularly of apparel items, to the European countries may face a big challenge in the future if European Union and Vietnam sign a proposed free trade agreement, commerce ministry officials said. The tariff preferences Bangladesh is enjoying on the EU market under GSP scheme may be eroded gradually and Vietnam may take away some market share of Bangladesh in the EU countries if the agreement is signed, the officials said.
‘Bangladeshi exporters may face tough competition in exporting readymade garment products on the EU market if Vietnam is given duty-free facility under the FTA as the country exports almost same kind of RMG products in the region,’ a tariff commission official told New Age on Sunday.
In a recent letter to the commerce ministry, Bangladesh embassy in Brussels also expressed concern over the issue and suggested that the commerce ministry should take necessary steps to overcome the challenge.
Under the circumstances, the commerce ministry last month asked the Bangladesh Tariff Commission to conduct an analysis to this end, officials said.
Currently Bangladesh’s apparel items enjoy duty-free and quota-free market access to the European countries through ‘Everything But Arms’ scheme under generalised system of preferences while Vietnam has to pay more than 9 per cent duty.
The negotiation between Vietnam and the EU is likely to end at the end of this year or early next year as both the sides started the final round of negotiations in January 2013.
Officials said that Vietnam had already become one of the major competitors of Bangladesh on the EU market in exporting RMG items and EU was the largest export market for the both countries.
So, if Vietnam gets zero duty on RMG exports under the proposed FTA, Bangladesh’s export may experience a severe slowdown.
‘Bangladesh as a least developed country should immediately start negotiations with the EU to ensure its interest because of the proposed FTA between EU and Vietnam,’ another official said.
Bangladesh should try to convince the EU so that it keeps major exporting commodities of LDCs in the sensitive list of its FTA with Vietnam, he said.
Along with the negotiations, Bangladesh should diversify its export baskets, develop infrastructure including power and gas supply to reduce cost of business and increase competitiveness of the exporters, the official said.
Bangladesh embassy in Brussels, which represents the country to the European Union, said the EU was negotiating to sign the FTA with some other countries including India, Japan, Malaysia, Singapore and Indonesia.
Some of these countries are beneficiary of GSP general preferences and compete in products like textiles, frozen foods, leather goods and agricultural products with the LDCs including Bangladesh.
‘If all the FTAs under negotiation by the EU are concluded within 2013-2014, the countries may take hold of some market share from Bangladesh in the EU countries,’ the letter said.
Bangladeshi exporters may also not be able to reap the perceived benefit of GSP scheme, the report said.
Courtesy of New Age
