Bangladesh To Enjoy Duty Free Market Access Benefits Until 2029

Trade & Policy

Bangladesh To Enjoy Duty Free Market Access Benefits Until 2029, Three Years After Graduating To Developing Nation

Bangladesh will keep enjoying duty-free market access under Least Developed Countries (LDC) till 2029. This is a three years’ grace period after the country’s graduation from LDC to a developing nation in 2026. This extension has been endorsed by 166 members of the World Trade Organisation (WTO) at its Ministerial Conference that concluded in Abu Dhabi on 1st March 2024.

"A member that graduates from the LDC category shall continue to be eligible for LDC-specific technical assistance and capacity-building provided under WTO's Technical Assistance and Training Plan for a period of three years after the date on which the decision of the UN General Assembly to graduate that member from the LDC category becomes effective," said the WTO.

After an intense negotiation, the member countries reached the consensus on the extension of the trade benefits for the LDCs (least-developed countries) that graduate. Bangladesh joined the LDC group in 1975 and is going to leave it on November 24 of 2026.

Experts indicated that Bangladesh was to lose US$7 billion worth of trade per year following the graduation due to erosion of preferential trade facilities under LDC. A recent study also indicated that Bangladesh’s graduation would result in a decrease in apparel exports of 11.8 per cent. That uncertainty is now over until 2029.

The garment industry is the primary export sector in Bangladesh, which has around 81 per cent share in total exports. It is the world’s second-largest exporter of garments, accounting for 7.9 per cent share of the global apparel trade. The Ready-made garment (RMG) industry heavily relies on tariff benefits and around 73% of Bangladesh's RMG export is enjoying duty-free market access as LDC. The withdrawal of these advantages could have led to job losses and decline in Bangladesh’s export trade as well as would cause a major shift in the sourcing pattern of global apparel buyers.

The EU is the largest market for Bangladeshi apparel that constitutes 64% of the country’s apparel export. The graduation to developing nation would have triggered a tariff of 9%-10% on the merchandise which now enjoys duty free access.

The WTO countries agreed to extend the trade benefit to the graduated LDCs at the previous 12th Ministerial Conference in Geneva in 2022 without any specified time period. Bangladesh can now negotiate for trade benefits with the EU, China, India, UK, South Korea and other countries where it qualifies for the facility.

However, Bangladesh will not enjoy trade benefits with the USA even though the American negotiator endorsed the extension. The US currently has no preferential duty programme for the LDCs and Bangladesh's RMG export faces a 15.62 per cent tariff in the US market.

Bangladesh's RMG trade has grown mainly riding on the duty benefit under the LDC category. These benefits have played a key role in making the nation the second-largest apparel supplier in the world after China. In 2023, The country’s apparel export touched a record US$ 47.38 billion. The country is the highest beneficiary of the duty-free trade benefit among 45 LDCs.

Bangladesh will keep enjoying duty-free market access under Least Developed Countries (LDC) till 2029. This is a three years’ grace period after the country’s graduation from LDC to a developing nation in 2026. This extension has been endorsed by 166 members of the World Trade Organisation (WTO) at its Ministerial Conference that concluded in Abu Dhabi on 1st March 2024.

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