Another uncertainty has lifted from the export trade of Bangladesh, as the UK government has said that Bangladesh will continue to relish duty free benefits for the export of its products to the United Kingdom after the termination of the Brexit transition period.
Along with 46 other least developed countries, Bangladesh will not face any tariffs after that period. Low-income and lower-middle income states will also profit from lower tariffs compared to the UK Global Tariff, UK Department for International Trade, Foreign, and Commonwealth and Development Office said in a recent statement.
The trade preference scheme will protect any entitled countries that do not have their current trade agreements transitioned into a new agreement with the UK.
Liz Truss, International Trade Secretary, UK said, “Free trade helps businesses to grow, boosts the economy and creates new jobs. We are making sure that the world’s poorest countries can continue to take advantage of the opportunities that free trade offers them by allowing them to export their products to the UK at preferential rates.”
Truss said this would support developing economies in creating strong industries, creating jobs and help them lessen their dependence on overseas aid in the long term.
The UK left the EU on January 31. Britain is now in an 11-month period, known as the transition that keeps the UK bound to the EU’s rules. The transition will end on December 31, 2020. It cannot be extended beyond that date, BBC reports.
The UK is the third largest export destination after the US and Germany for Bangladesh. At present, more than 700,000 Bangladeshis are living in the UK. Demand for ‘Made in Bangladesh’ apparels, vegetables, pharmaceutical items and processed foods is increasing there.
In the fiscal 2018-19 Bangladesh exported goods worth $4.83 billion to the UK. Readymade garment (RMG) products constituted 93% of the exports. But the covid-19 pandemic offended the businesses in the next fiscal.
Rubana Huq, President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) on the UK’s decision said, “I think the only benefit is that we will continue to enjoy the same preferential treatment that is duty free access by complying single transformation process.”
Huq told, “Since the UK may not change its tariff regime after Brexit, this will save a market of $3.17 billion dollars.”
The UK takes around 11.3% of Bangladesh’s garment exports, so the continuation of existing tariff structure would keep the employment and export earnings of this sector protected to a significant extent, she added.
UK imported roughly £8 billion-worth of textiles and apparel products from qualified countries last year. This accounted for 30% of all textile and UK apparel imports, according to the statement from the UK Department for International Trade.
British importers will remain to pay zero or reduced tariffs on everyday goods such as clothing and vegetables from the world’s meager countries, the statement said.
The UK’s Generalised Scheme of Preferences (GSP) will protect all the same countries that are presently qualified for trade preferences under the EU’s GSP, it added.
Liz Truss said the scheme would also aid British businesses continue trading seamlessly after the UK leaves the EU, as well as giving British consumers continued access to some of their favourite products at affordable prices.
UK Foreign Secretary Dominic Raab said globally Britain is a partner of choice for developing countries.
“As today’s announcement demonstrates, we take a liberal approach to trade, recognizing that many developing countries want to trade their way to greater prosperity,” Raab said.
“We back that up with the integrity of the investments UK businesses make, and our commitment to be a force for good in their communities through our support for green jobs, climate change mitigation and programs to deliver girls education,” he added.