The Free Trade Agreement between India and Europe to have serious impact on Bangladesh’s trade !

Dhaka (Bangladesh) –  The free trade agreement between India and the European Union is expected to have a serious impact on Bangladesh. The agreement has caused serious concern among the garment exporters from Bangladesh. The MoU provides duty free access to Indian textile establishments to Europe. It threatens to erode Bangladesh’s competitive advantage over the years. After the agreement comes into force, the 12 per cent duty on Indian textiles in the European market will be waived, which may reduce Bangladesh’s benefits.

Fear of Bnagladesh’s competitiveness getting curtailed in European market

Mostafizur Rahman, senior adviser at Bangladesh’s ‘Centre for Policy Dialogue’, told ‘The Daily Star’  newspaper, that the implications of the agreement will be huge, especially for the textile industry. Once India gets tax-free access, Bangladesh will be less competitive in the EU market.  Bangladesh is likely to be hit by a double blow. At present, Bangladesh exports garments to the European Union without paying taxes; However, this concession is now only for 3 years and it will start from November this year. After this, Bangladesh will be out of the group of least developed countries.

Backlash of increased tariff if no new trade agreement is done

If Bangladesh fails to sign any new agreement with European countries, i.e. a bilateral trade agreement or special status, then it will have to pay 12.5% tariff to sell garments in the European market after 2029. On the other hand, countries like India and Vietnam, which are under free trade agreements, will continue to sell duty-free textiles in Europe. This is likely to have a serious impact on more than 50 per cent of Bangladesh’s textile trade.