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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...
www.newagebd.net
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.
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.
