[🇧🇩] LDC Graduation For Bangladesh

Saif · Dec 29, 2025

Experts stress efficient trade diplomacy ahead of LDC graduation

Bangladeshi exporters are likely to absorb about 40 per cent of the tariff they might face after the grace period for graduating from least developed country status to export to the European Union, according to a recent study...

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Experts stress efficient trade diplomacy ahead of LDC graduation
Staff Correspondent 29 December, 2025, 22:24

Bangladeshi exporters are likely to absorb about 40 per cent of the tariff they might face after the grace period for graduating from least developed country status to export to the European Union, according to a recent study.

It also stated that in the post-2029 period, Bangladesh might face 12 per cent tariffs on exports to the EU, while Vietnam, Pakistan, and Sri Lanka would face zero tariffs due to free trade agreements and GSP+.

Deen Islam, an associate professor at Dhaka University, presented the study at a seminar titled ‘Assessing Tariff and Exchange Rate Pass-through in Apparel Export Policies in the European Union: LDC Graduation Implications for Bangladesh’, organised by the Research and Policy Integration for Development and the International Growth Centre at Dhaka University.

‘For every 10 per cent tariff imposed by the EU, Bangladeshi exporters will lower pre-tariff prices by about 4 per cent to remain competitive,’ he added.

The study also showed that the top ten apparel items have an average weighted price of about 36 per cent lower than that of China and Vietnam.

He also said that even Cambodia, another LDC, achieves a higher average price than Bangladesh.

Bangladesh is scheduled to graduate from the LDC category in 2026, with a transition period allowing temporary continuation of specific trade preferences.

Experts said that LDC graduation could pose a threat, as exporters might bear a large share of the tariff costs; however, early and coordinated preparation could soften the transition’s impact.

He said that exporters are already operating on thin profit margins, leaving little capacity to absorb new tariff costs without significant financial strain.

For every 10 per cent tariff imposed by the EU, Bangladeshi exporters will have to lower pre-tariff prices by about 4.0 per cent to remain competitive, he said.

The study also explored to what extent exporters can adjust their prices when exchange rates change, he said, adding that an appreciating currency has been eroding competitiveness.

The study showed that between 2012 and 2022, the taka appreciated significantly in real terms against the currencies of its main rivals, like China, Vietnam, and Cambodia.

This decade-long currency trend has made Bangladeshi exports progressively more expensive relative to its key competitors, adding another layer of pressure, it said. Bangladesh’s cost competitiveness has been silently eroding, even before the tariff shock, it said.

The woven sector is more vulnerable due to its heavy reliance on imported raw materials, such as fabrics, the study added.

He recommended that the government and exporters secure market access by focusing on diplomatic and trade negotiations, strengthening supply chains and the business environment, and pursuing industrial strategy, product and market diversification, and boosting backward linkages.

In his speech, Munir Chowdhury, national trade expert for the World Bank-initiated Bangladesh Regional Connectivity Project, said that Bangladesh suffers from a serious gap in trade diplomacy and negotiation capacity, which could undermine the country’s export competitiveness after it graduated from the least developed country status.

He also said that without skilled trade negotiators and a strategic approach to trade diplomacy.

‘Trade diplomacy is not optional anymore. If we fail to negotiate effectively, we would lag behind our competitors in export markets,’ he said.

He pointed out that competing countries are aggressively negotiating favourable trade deals, while Bangladesh remains behind in securing similar arrangements.

‘Vietnam will enjoy zero-duty access to the EU under its free trade agreement. But after the LDC grace period ends, Bangladesh’s exports to the EU could face tariffs of around 12 per cent if we fail to sign an FTA,’ he said.

He warned that such a tariff burden would severely affect Bangladesh’s readymade garment sector, which accounts for the bulk of the country’s export earnings.

He argued that Bangladesh should immediately establish a dedicated trade negotiation pool or a specialised wing within the government to conduct trade talks in a professional and coordinated manner.

He also emphasised the need for capacity building, data-driven negotiation strategies, and a harmonisation of all trade-related policies.

‘In the current global trade, we must focus on non-tariff barriers as these are not less important than tariff barriers,’ he added, saying that proper logistics, less lead time, efficient ports, and transport are the main components of nontariff barriers.

In his speech, Md Mamun-Ur-Rashid Askari, joint chief of the Bangladesh Trade and Tariff Commission, said that FTAs and trade negotiations mainly depend on the negotiator’s skill.

‘It could be complete in a short time if both parties are convinced,’ he added.

He also said that Bangladesh is in another FTA negotiation with South Korea, with the second round expected in January.

M Abu Eusuf, executive director of the RAPID, gave the welcome remarks, while Md Taiabur Rahman, dean of the Social Science Faculty of the DU, gave the concluding remarks.

Academics, experts, and government officials also spoke at the event.

Saif · Jan 4, 2026

Businesses underprepared as LDC graduation clock ticks

With less than eleven months left before Bangladesh exits the least developed country club, businesses say they are still not adequately prepared to face the harsher realities of a post LDC world.

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Businesses underprepared as LDC graduation clock ticks

With less than eleven months left before Bangladesh exits the least developed country club, businesses say they are still not adequately prepared to face the harsher realities of a post LDC world.

At the core of their concerns is the absence of trade agreements that would allow exporters to retain preferential market access once the country formally becomes a developing nation.

Business leaders also point to weaknesses at home, from infrastructure and logistics to limited product diversification and high production costs, all of which undermine competitiveness against regional peers.

Manufacturers say if the government presses ahead with graduation without adequate preparation, they may lose at least $8 billion a year in overseas sales currently protected by preferential treatment.

The interim government has repeatedly said it will stick to the November 2026 graduation deadline. But in the face of widespread opposition, it invited a United Nations (UN) body to assess conditions on the ground.

The United Nations Committee for Development Policy (UNCDP) conducted its first assessment in November last year, gathering views from business leaders, policymakers and economists. A second round-up is scheduled for February, the same month the next national election is due.

Now business leaders say they plan to approach the next government to seek a deferment of at least six years.

AT LEAST $8B AT STAKE

Studies suggest Bangladesh could lose around 14 percent of its annual export earnings, equivalent to about $8 billion, once it leaves the LDC group and preferential access begins to fade.

At present, exporters enjoy duty-free or preferential entry to 38 countries and several trade blocs. About 73 percent of national exports benefit from these facilities.

According to trade data, Bangladesh alone accounts for 67 percent of total LDC preference utilisation among the 46 countries in the group.

Economists say these advantages have been central to export growth over the past decades. Since joining the LDC category in 1975, Bangladesh has used preferential access to build a strong export base, especially in garments.

Last year, apparel exports reached $39 billion, making Bangladesh the second-largest garment exporter after China with close to 8 percent of the global market. Meanwhile, the country's economy has grown into a $456 billion market.

The risk, according to economists, is concentration. Unlike many countries that have graduated, Bangladesh is heavily reliant on a single export sector and a limited number of markets, leaving it more exposed to any sudden loss of trade privileges.

FEW TRADE DEALS SO FAR

To manage the graduation shock, the government last year adopted a Smooth Transition Strategy (STS). The strategy envisaged signing trade agreements with major partners to preserve market access after graduation.

But the progress has been slow so far.

Till January this year, Bangladesh has signed just one preferential trade agreement (FTA) with Bhutan, effective since 2022.

Negotiations with Japan on an Economic Partnership Agreement (EPA) were completed in December last year. Commerce Adviser Sk Bashir Uddin said the deal with the island nation is expected to take effect by the end of January.

Talks with other key partners and blocs, including the European Union (EU), South Korea, the United Arab Emirates, Indonesia, RCEP and Asean, continue with no clear timelines.

At home, businesses say conditions have worsened rather than improved. Bureaucratic delays, policy uncertainty and infrastructure bottlenecks continue to push up overhead costs and weaken competitiveness.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the government does not have a clear roadmap for graduation.

"The interim government did not sit with businessmen and did not prepare any concrete plan for the post-LDC period," he said.

HOME FRONT WEAK TOO

Last year, leaders of 16 major trade bodies and chambers wrote to Chief Adviser Professor Muhammad Yunus, urging the interim government to seek a deferment of at least six years.

They cited a long list of pressures, including high interest rates, stress in the financial sector, gas shortages, rising energy prices, limited industrial land and inadequate workforce skills.

Business leaders argue that pressing ahead without proper groundwork would be a costly error.

"The decision on LDC graduation should not be whimsical. It must be based on detailed studies," said Anwar-ul Alam Chowdhury (Parvez), president of the Bangladesh Chamber of Industries (BCI) and a former BGMEA president.

Showkat Aziz Russell, president of the Bangladesh Textile Mills Association (BTMA), said primary textile producers are already struggling under higher production costs. "Gas prices were raised locally although international prices fell, which hit production hard," he said.

He added that recent improvements in foreign exchange reserves and remittance inflows do not yet point to economic stability. "Graduating in such a situation would not reflect wisdom," he said.

Some economists echo these concerns.

Mohammad Abdur Razzaque, chairman of local think tank Research and Policy Integration for Development (RAPID), said the level of overall preparation is inadequate given the limited time left.

"Bangladesh must identify a small number of top priorities that can realistically be addressed within the next six months," said the economist.

Those priorities, according to him, include reducing the cost of doing business, improving law and order, streamlining customs procedures and stepping up engagement with the European Union to secure GSP Plus status after graduation.

Razzaque said that while deferment remains an option, the looming election and political transition make decisions more complex.

Even so, he said graduation could still serve as a policy anchor if used to accelerate long delayed reforms.

Anisuzzaman Chowdhury, special assistant to the chief adviser of the interim government, said progress should be viewed in relative terms, as there is no single benchmark.

He said the government has identified 12 priority export sectors beyond garments and is working to improve compliance and the broader business environment.

Saif · Wednesday at 9:00 PM

Bangladesh and limits of LDC privileges

BANGLADESH’S scheduled transition from the United Nations Least Developed Country classification on 24 November 2026 has been celebrated nationally as a landmark of economic achievement and a symbol of national pride. Official statements and media commentary emphasise the country’s rising gross...

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Bangladesh and limits of LDC privileges

LDC map. | wikimedia

BANGLADESH’S scheduled transition from the United Nations Least Developed Country classification on 24 November 2026 has been celebrated nationally as a landmark of economic achievement and a symbol of national pride. Official statements and media commentary emphasise the country’s rising gross national income, improved human development indicators, and strengthened resilience to environmental shocks. Yet beneath this triumphant narrative lies a far more complex and precarious reality. Graduation from the Least Developed Country category does not merely mark symbolic progress; it entails leaving behind an international legal framework that provided extensive ‘special and differential treatment’ and entering a system whose protections are fragmented, provisional and politically contested. In effect, Bangladesh risks advancing on the development ladder without a safety net.

The central issue is not that the World Trade Organisation is inherently antagonistic towards least developed countries. Rather, Bangladesh has not yet formulated a cohesive legal and strategic plan to manage its transition, either in Geneva, where international trade negotiations are conducted, or domestically in Dhaka. United Nations graduation is facilitated by the Committee for Development Policy and was ratified by a United Nations General Assembly resolution in 2021, which confirmed that Bangladesh would graduate in 2026 after meeting three criteria in successive triennial reviews: gross national income per capita, the Human Assets Index, and the Economic and Environmental Vulnerability Index. The significance of this United Nations designation is far-reaching. The World Trade Organisation’s legal framework relies on the United Nations Least Developed Country list. Once Bangladesh ceases to be classified as a least developed country, certain clauses that explicitly apply to ‘least developed country members’ will no longer be operative.

The legal foundation for these protections stems from the 1979 ‘Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries,’ also known as the Enabling Clause. This clause permits developed countries to extend unilateral, non-reciprocal preferences to developing countries and anticipates special treatment for the least-developed among developing countries. Further, the General Agreement on Tariffs and Trade 1994, Part Four, Articles Thirty-Six to Thirty-Eight, established a framework allowing least developed countries such as Bangladesh to obtain duty-free, quota-free access to international markets and more lenient regulatory obligations without offering reciprocal concessions. These protections enabled Bangladesh to expand its export base, particularly in textiles and garments, while nurturing nascent industries without facing punitive trade barriers.

Graduation does not remove all special and differential treatment. Bangladesh will continue to be classified as a developing country under World Trade Organisation rules. However, it will lose the most significant least-developed country-specific flexibilities, precisely at a time when the country’s export structure remains concentrated and its industrial strategy is still developing. Recent international developments provide only limited relief. The Thirteenth World Trade Organisation Ministerial Conference Decision on ‘Smooth Transition Support Measures for Countries Graduated from the Least Developed Country Category,’ adopted in March 2024, offers two binding advantages for graduating least developed countries: a three-year extension of certain procedural flexibilities under the Dispute Settlement Understanding, and an additional three years of eligibility for technical assistance and capacity-building programmes following the effective date of United Nations graduation. While Bangladeshi media has portrayed this as a generous ‘smooth transition,’ legally these measures are narrow and do not address the most critical areas of vulnerability.

Two legal frameworks in particular demand attention. First, under the Agreement on Trade-Related Aspects of Intellectual Property Rights, Article Sixty-Six Point One, least developed country members are exempted from applying most provisions of the agreement until a transition period, currently extended until 1 July 2034. Bangladesh’s graduation in November 2026 will trigger these obligations years earlier than initially intended, constraining policy options for pharmaceutical patents, technology transfer, and domestic innovation. Second, under Article Twenty-Seven Point Two of the Agreement on Subsidies and Countervailing Measures and Annex Seven, least developed countries are exempt from the general prohibition on export subsidies, providing essential latitude to support exporters in line with developmental objectives. Graduation will subject these fiscal incentives, particularly in ready-made garments-dominant export processing zones and special economic zones, to heightened scrutiny. The ministerial decision of 2024 deferred these critical matters to future negotiations, leaving Bangladesh reliant on non-binding encouragement rather than legally enforceable protections.

Compounding these legal challenges, the global politics surrounding special and differential treatment are shifting. Large advanced economies are increasingly sceptical of open-ended privileges for least developed countries. China’s 2025 declaration that it will forego such benefits in future World Trade Organisation negotiations exemplifies a trend towards targeted, case-by-case flexibilities rather than open-ended entitlements based on status alone. Graduating least developed countries, including Bangladesh, are caught in a transitional limbo: stripped of formal least developed country protection, yet without a clearly defined set of enforceable, vulnerability-based exemptions.

Domestically, discussions have largely emphasised technical and economic measures: tariff rationalisation, export diversification, macroeconomic resilience, and investment in skills. Think tanks such as the Centre for Policy Dialogue and the South Asia Network on Economic Modelling, along with national media outlets, have highlighted potential declines in exports and threats to the competitiveness of the ready-made garments sector. Yet far less attention has been devoted to questions of hard law. Which specific World Trade Organisation provisions will become inoperative in 2026? What binding substitutes, if any, are under negotiation? How will Bangladesh operationalise flexibilities under the Agreement on Trade-Related Aspects of Intellectual Property Rights and the Agreement on Subsidies and Countervailing Measures post-graduation? Is the country prepared to initiate litigation if preference erosion or stricter enforcement of regulations compromise its legitimate expectations?

Bangladesh’s current strategy appears largely technical rather than legal-political. A Smooth Transition Strategy has been implemented, and coordination mechanisms have been established for domestic reforms. While these efforts are necessary, they are insufficient to safeguard the country’s trade and industrial interests. To secure a resilient post-graduation position, Bangladesh must adopt three strategic shifts. First, it should advocate explicitly and transparently for time-limited extensions of flexibilities under Article Sixty-Six Point One of the Agreement on Trade-Related Aspects of Intellectual Property Rights and Annex Seven of the Agreement on Subsidies and Countervailing Measures, tailored to the country’s export structure and technological development needs. Second, it must pursue binding guarantees for market access rather than relying on discretionary actions by preference-granting nations, potentially through coalitions with other graduating least developed countries to secure time-bound waivers in exchange for domestic reforms. Third, special and differential treatment should be integrated into national development strategy. Tariff policies, industrial frameworks, and investment plans must be designed with clarity on which flexibilities endure post-graduation, which are negotiable, and which will be eliminated. Institutional capacity, regulatory coherence, and readiness to enforce rights through World Trade Organisation dispute mechanisms are critical.

Bangladesh’s graduation is not a simple milestone. It represents a shift from a formal, treaty-supported set of privileges to an ambiguous developing-country status amid evolving international norms. Whether this transition becomes a springboard for a more assertive, legally informed international economic strategy or a trigger for preference erosion and constrained policy space will depend on decisions made in Dhaka and Geneva over the next two years. Symbolic celebrations and technocratic planning alone will not suffice. A nation that has leveraged least developed country privileges more effectively than almost any other cannot afford to graduate without constructing its own safety net.

Samanta Azrin Prapty is a legal researcher.

Saif · 2026-01-23T20:26:59-0500

Bangladesh’s LDC graduation: Why readiness is the best strategy

In recent times, the discourse around Bangladesh’s upcoming LDC graduation has primarily hovered around the issues of deferment.

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Bangladesh’s LDC graduation: Why readiness is the best strategy

21 January 2026, 00:37 AM

By Mustafizur Rahman

Illustration: E. Raza Ronny

In recent times, the discourse around Bangladesh’s upcoming LDC graduation has primarily hovered around the issues of deferment. Regrettably, discussion as regards ensuring sustainable graduation tends to get lost in the somewhat speculative assertions in view of this. However, for the discussion on LDC graduation to be impactful and meaningful, attention ought to focus on how to make LDC graduation smooth and sustainable, and not be deflected by issues of deferment.

Interim Government’s Stance on Deferment

As may be recalled, the Interim Government (IG) initially took the decision to go ahead with the graduation timeline as stipulated by the UN General Assembly (UNGA) decision, to be effective on November 24, 2026. Some of the recent signals in this regard have been somewhat contradictory though. A number of policymakers and high-level government officials have been making the point that deferment of graduation would help Bangladesh to buy some additional time to prepare for LDC graduation. However, to note, no official announcement has yet been made by the Interim Government that indicates that it has changed its earlier stance and decided to go for a formal submission requesting for deferment of LDC graduation.

It will be pertinent to recall in connection with the above that in early November 2025 the government submitted the Bangladesh Country report to the UN Committee for Development Policy (UN-CDP) as part of the CDP’s Enhanced Monitoring Mechanism (EMM) which has been put in place to assess the state of preparation of graduating LDCs (GLDCs). CDP makes an assessment about the state of preparedness of a particular GLDC based on the country report as also its own assessment. As is known, it is on the basis of the recommendation of the CDP that countries are recommended for graduation to UN-ECOSOC and UN GA. Bangladesh was first recommended in 2018 and then in 2021 at CDP’s triennial review meetings based on which the decision was taken by the UN GA at its meeting on 24 November 2021 as regards Bangladesh’s LDC graduation (along with Nepal and Lao PDR).

The aforesaid Country Report provides an indication as to how the country itself assesses its state of preparation for LDC graduation. The country report, titled Performance of Economy and Preparations for Sustainable Graduation from LDC Status During The Preparatory Period, transmits three key messages: firstly, Bangladesh has continued to meet all the three graduation criteria based on which CDP recommended the country for graduation in the first place. Second, the government has been undertaking a number of steps in line with its Smooth Transition Strategy (STS) which Bangladesh has prepared in view of the upcoming LDC graduation. And, thirdly, whilst notable progress has been made, many challenges remain in implementing the STS. The report also mentions about the vulnerabilities inflicting the economy, and the difficulties that would originate from the loss of international support measures (ISMs) including Special and Differential Treatment (S&DT) as regards compliance with WTO obligations.

In the way forward section of the report, several measures are mentioned which are to be implemented specifically by the government, the private sector, development partners and by the international community and the UN. Indeed, these actions will need to be pursued in all earnest both during the run up to, and also following, Bangladesh’s graduation from the group of the LDCs.

Bangladesh’s graduation will be taking place at a time when geo-economic and geo-strategic scenarios are evolving in a way that confront with many new challenges and difficult choices

The overall vibe of the Country Report is that inspite of the formidable challenges, Bangladesh is on course to graduate in November 2026. On the other hand, as was noted above, some high-level policymakers and government officials have come out publicly to say that deferment will give Bangladesh additional time to prepare for smooth and sustainable graduation.

One understands the political economy aspect of the decision as regards making a submission for deferment. The Interim Government would not like to be seen as the one which was responsible to put an on-track to graduation Bangladesh off the track. This could put under question the credibility of its performance and may be used against it by its detractors.

Arguments Favouring Deferment

The private sector of Bangladesh, in one voice, but also sizeable sections of the country’s media, civil society, activist community, think tank representatives and public opinion makers, have been arguing that Bangladesh needs more time to be ready for graduating out of the group of LDCs. For understandable reasons, the BGMEA, representing the apparels manufacturers and exporters of the country, has come out very strongly in favour of deferment.

Interestingly, some of the stakeholders who at the time hailed graduation as an outstanding achievement of the then government are at present the most vocal proponents of deferment of graduation!

No one can contest the fact that graduation will have serious implications on several fronts: global, in view of significant preference erosion and changes in trading environment, and domestic, in view of stringent compliance requirements, tariff rationalization, disciplines as regards subsidy and incentives management, more onerous standards and certification requirements, stringent labour-gender-environmental compliance regulations, more demanding IPR enforcement mechanism and in many other areas. If domestic policies violate WTO-mandated regulations and disciplines as applied for non-LDC developing country members, Bangladesh could be dragged to the WTO-Dispute Settlement Body (WTO-DSB) with likely trade-related sanctions in response to any actual or perceived violation of WTO rules.

As is known, barring the United States, export of apparels originating from the LDCs are accorded duty-free access in almost all developed as also a number of developing country markets. Similar is the case with the country’s pharmaceutical sector which enjoys benefits under TRIPS waiver in the form of ability to produce and export patented drugs without the need to comply with patent/license requirements. So, the concerns about loss of preferences, S&DT and ISMs in general is understandable.

To note, Bangladesh’s political parties are yet to take a stance in view of the question of deferment, and are also not engaging in the relevant discussion. It is not clear whether in their respective election manifesto any political party will make a pledge or take a position in this context. One can anticipate that once an elected government will hopefully be in place in February 2026, it will be under a lot of pressure, from powerful stakeholders and business groups, to take a concrete position, without doubt favouring a deferment of graduation. If it so decides, the newly elected government will need to make a formal submission to the UN requesting for deferment for a specified period.

Making Submission for Deferment

If Bangladesh is serious about deferment, it will need to make a formal request for deferment of the country’s graduation from the group of LDCs. This can be submitted to the CDP for consideration, or submitted directly to the UN. However, to note, the window of opportunity for making a submission for deferment, if Bangladesh so decides, is narrowing since November 2026 is approaching fast.

If there is no submission for deferment, it is highly unlikely that CDP will make any recommendation to this effect on its own. If there is a submission by Bangladesh, it will assess the request and give its opinion to the UN ECOSOC (United Nationas Economic and Social Council) for final decision by the UN GA. As was noted earlier, Bangladesh also has the option of applying directly to the UN. It is the UN GA which is the final arbiter as regards the decision to defer the graduation of any LDC or not. A majority of members will need to vote in support of any submission for deferment.

If Bangladesh decides to apply for deferment, its application has to be well-substantiated, articulating the grounds on which such a request was being made. If Nepal and Lao-PDR, the other two LDCs which are slated for graduation on the same day as Bangladesh, decide to go ahead with graduation, Bangladesh’s case will no doubt be significantly weakened. Many UN members will be reluctant to support Bangladesh if that be the case.

This is not to say that Bangladesh does not have a good case. Amongst the LDCs, Bangladesh has been the one which was able to reap the most benefit originating from LDC-specific ISMs including S&DTs under the various WTO Agreements. Consequently, it has the most to lose. This makes the task of sustainable graduation more challenging compared to other GLDCs. Also, the July-August 2024 uprising, the upcoming democratic transition and the resultant economic disruptions have added new challenges which could be put forward as accentuating factors.

Also, the case of Nepal is different from Bangladesh. The larger share of Nepal’s exports will continue to enjoy duty-free treatment even after graduation since it has a bilateral free-trade agreement with India, its major trading partner. Also, no other LDC, including Nepal, has such a large domestic pharmaceutical industry as is the case with Bangladesh. One can expand and extend this line of argument further to emphasise the point that the Bangladesh case is indeed unique and is of distinctive and different nature altogether compared to rest of the GLDCs.

Preparation as Priority

However, what should not be lost sight of in the discourse and dilemma concerning deferment is that the day of reckoning will come soon - if not in 2026, then may be with a delay of, under the best of scenarios, only a few years. The offer of extending preferential market access by the European Union (EU), United Kingdom (UK), and some of the other major preference-offering countries, by an additional three years beyond the graduation timeline, will no doubt provide some extra time to prepare for graduation. However, this offer concerns only preferential market access. The loss of other LDC-specific S&DTs and ISMs in general will come into play immediately after Bangladesh has left the group of LDCs.

The most important question, however, is that in case graduation is deferred, will this be an excuse to kick the can down the road, meaning yet another opportunity to delay taking the hard decisions? Or the additional time will be taken advantage of for doing the necessary homework and for taking preparation to make graduation smooth. This is what needs to be at the centre of the discussion on deferment of graduation.

The Smooth Transition Strategy (STS; February 2025), prepared by the Interim Government, is a well-prepared action-oriented document, successful implementation of which would go a long way in ensuring that Bangladesh’s graduation is sustainable. STS has 5 pillars, 30 areas, and 157 concrete time-bound actions, with specific institutions and agencies responsible and accountable for implementation of the actions. The pillars are the followings: (a) Ensuring macroeconomic stability; (b) Exploring and securing trade preferences and transition measures; (c) Promoting export diversification and competitiveness;(d) Building productive capacity; and (e) Fostering partnerships and international cooperation. Priorly, attention must be given to strengthening the concrete actions under each of these pillars.

To recall, the interim government has set up a high-level Steering Committee to provide oversight to the process of preparing for graduation. It has also constituted a High-Level Expert Group to monitor the implementation of the STS. All relevant stakeholders -state, and private and other non-state actors- will need to work in partnership, and with due urgency, to ensure that STS deliverables are actually delivered during the run up to graduation, as also beyond.

Bangladesh’s graduation will be taking place at a time when geo-economic and geo-strategic scenarios are evolving in a way that confront Bangladesh with many new challenges and difficult choices. To recall, developments such as US administration’s so-called reciprocal tariffs and EU’s Carbon Border Adjustment Mechanism (EU-CBAM)-induced carbon emission taxes will add new dimensions to the global trade. This will add to the formidable challenges Bangladesh will need to deal with in making the LDC graduation sustainable.

Thus, the question that needs to be asked is how best to prepare Bangladesh for this newly emerging trading scenario. How to ensure that exporters, entrepreneurs and businesses are adequately compensated for the loss of LDC-specific ISMs and S&DTs which they have enjoyed for over five decades since Bangladesh became a member of the group of LDCs in December 1975. These are the questions that should disturb the policymakers and all concerned stakeholders.

Entrepreneurs will need to have access to an effective single window and one stop service, the logistics policy will need to be implemented in full, and cost of doing business will need to be reduced significantly. Skills and productivity-based competitiveness will need to come into play in place of preference-driven and incentives-induced competitiveness. A number of actions are being taken at present, however, many tasks remain unaddressed or have not been addressed adequately.

Concluding Remarks

The worst-case scenario for Bangladesh will be in not being able to do the needful to ensure sustainability of LDC graduation but graduation being effected on 24 November 2026 (whether a submission is made or not). In view of such a possibility, Bangladesh must take energetic and targeted steps to implement the STS in a time-bound manners, with due urgency. The debate and discussion on deferment must not deflect attention from what ought to be done to ensure that Bangladesh’s graduation is smooth, takes place with momentum and is sustainable. The discussion on deferment should not serve as an excuse to defer hard choices and not doing what needs to be done, and merely as an opportunity for kicking the can down the road.

Mustafizur Rahman is a Distinguished Fellow Centre for Policy Dialogue (CPD)