The new government formed by BNP will seek to defer Bangladesh’s graduation from the Least Developed Country (LDC) category to developing-nation status by at least three years, Commerce Minister Khandakar Abdul Muktadir said yesterday.
“We will initiate the process tomorrow [Wednesday] to defer the LDC graduation by at least three years,” Muktadir told The Daily Star over the phone after taking oath as a minister. He added that the deferment aligns with his party’s policy position.
The Economic Relations Division (ERD) will lead the process, while the commerce ministry will formally initiate the procedure, he said.
The country’s business community, which believes Bangladesh is not yet ready to face the challenges of graduation, had been lobbying the immediate past interim government, led by Prof Muhammad Yunus, for a deferment.
Sixteen major business chambers and trade bodies also sent a letter to the interim government, requesting that graduation be postponed for at least six years, citing high interest rates and the economic challenges faced by various sectors due to the fallouts of Covid-19 and the Russia-Ukraine war.
Bangladesh is scheduled to graduate from the LDC category to developing-nation status on November 24 this year, having already met all three UN criteria — income, human assets, and economic and environmental vulnerability — twice in previous triennial assessments by the UN Committee for Development Policy (UN CDP). The third triennial assessment is currently underway ahead of the final graduation.
According to the government’s annual report submitted to the CDP in November last year, Bangladesh’s progress reflects its resilience and strong policy commitment. However, an independent UN panel also sought clarification on the country’s economic situation, inquiring about its readiness for graduation and progress in implementing the Smooth Transition Strategy (STS), a guideline designed to ensure sustainable graduation. The panel, which is scheduled to submit its report soon, also consulted with local businessmen during its visit.
Different local and international studies suggest that Bangladesh could lose up to 14 percent of its exports, equivalent to $8 billion annually, after LDC graduation, as the country would lose preferential trade benefits granted under the LDC category.
Since 1975, Bangladesh has enjoyed preferential market access in various developing and developed countries and trade blocs, helping it to become the world’s second-largest garment exporter. Currently, 73 percent of the country’s exports benefit from zero-duty access to 38 countries under LDC provisions.
Once the country graduates to developing-nation status, local exporters will face nearly 12.5 percent duty on exports to the European Union (EU), the largest export market. However, the EU has agreed to extend LDC trade benefits for three years, until 2029, providing a preparation period for graduating countries. Similarly, the UK, Australia, and Canada have confirmed they will extend LDC trade benefits for several years beyond graduation.
https://www.thedailystar.net/news/bangladesh/news/new-govt-seek-3-year-ldc-deferment-4108846