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Bangladesh RMGs will continue to enjoy duty-free access to the UK

by tbhdesk

The new scheme is called DCTS which will replace GSP

The readymade garment (RMG) products of Bangladesh will continue to enjoy duty-free market access in the United Kingdom (UK) after graduation from the least developed country (LDC) status, according to the new scheme addressed by the UK.

The UK government has introduced a new tariff scheme titled “Developing Countries Trading Scheme (DCTS)”, which replaces the EU GSP scheme under which Bangladesh used to access the UK free of duty.

According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the DCTS will make it easier to enjoy duty-free market access using imported raw materials.

As per the UN Committee for Development Policy, Bangladesh is expected to graduate from the status of LDC to a developing nation in November 2026 and the nation will lose its gains from preferential trade as a result of this.

However, up to 2029, only the European Union (EU) will continue to grant Bangladesh the LDC trade benefits during this grace period.

However, under the EU draft GSP proposal for 2024-34, Bangladesh’s apparel products may face textile safeguard measures, though the BGMEA and the Bangladesh government are trying to resolve this issue with the European Commission.

However, the UK DCTS does not include such textile safeguard provisions.

Even then, for the economically vulnerable countries the DCTS appears more flexible in implementing certain international conventions.

Faruque Hassan, president of the BGMEA, said via WhatsApp that however, as a nation they stand committed to continuing the momentum in social and environmental standards and have achieved and even go further.

This scheme will contribute to Bangladesh’s integration into the global economy, creating stronger trade and investment partnership with the UK, he added.

The UK is the third largest export destination for Bangladesh and the country bagged $5.02 billion by exporting RMG items to the destination in FY23, fetching a growth of 11.78% from $4.50 billion in FY22.

Moreover, during the January-July period of 2023, Bangladesh exported RMG items worth $3.11 billion to the UK, witnessing a growth of 14.11%, up from $2.72 billion in Jan-Jul of 2022.

The market share of Bangladesh has been growing every year as China, the leading exporter, has been losing market share due to rising manufacturing costs.

“BGMEA is continuously working in the arena of market access under the apparel diplomacy initiative. The DCTS scheme has followed a robust consultation process with stakeholders. BGMEA was also invited to participate in the consultation, which we have done in due process and time,” said Faruque Hassan.

He also said that they addressed all the issues relevant to the trade and they are grateful to the British government for considering those positively.

“As we have and are investing heavily to make our industry safer and sustainable, we see a growing commitment and interest among the British clothing brands and retailers,” he added.

The DCTS applies to 65 countries, including those that currently benefit under the UK’s GSP, offering lower tariffs and simpler rules of origin requirements for exporting to the UK.

“Apart from the UK, we have also been able to secure positive outcomes in market access in Canada and Australia,” said the BGMEA president.

Canada extends GPT till 2034

Recently, the Canadian Parliament has approved the finance bill where the General Preferential Tariff (GPT) scheme has been extended till the end of 2034, the scheme which Bangladesh has been enjoying since 2003 and is scheduled to expire at the end of 2024.

The Federal Budget aims to realign the GPT with the ongoing trade dynamics, sustainability priorities, and the economic context of the beneficiary countries.

Moreover, the Canadian government has also formed a new scheme under its GPT, called GPT+, which would expand product coverage where the developing countries have to meet and progressively improve their adherence to international labour rights and environmental standards.

Eligible countries will get additional tariff benefits beyond what is provided through the GPT program.

“BGMEA has been actively pursuing the matter of smoother transition after the LDC graduation takes effect with our major trade partners,” said Faruque Hassan.

He also said that Canada is one of the significant markets for Bangladesh’s apparel where they exported RMG items worth $1.55 billion in FY23.

“However, the share of Canada’s import from Bangladesh remains only 13.95%, meaning that we have a significant potential to further penetrate this market,” he also said, adding that with the GPT+ ahead, they should aim for a bigger pie and focus their efforts and resources to maximum this potential.

Source: Dhaka Tribune.

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