Trade cliff is closer than anyone admits

If Bangladesh's request is not approved, Bangladesh will cease to be listed as a Least Developed Country (LDC) by the United Nations on 24 November 2026, marking the beginning of challenges that the country is not fully prepared.

The most valuable trade asset of Bangladesh has been its LDC status. Garments enter European markets under the EU's Everything But Arms (EBA) programme at zero tariffs. This advantage propelled apparel exports to the EU to 23 billion dollars in 2023, up from 2.0 billion dollars in 2001. Today, ready-made garments (RMG) account for 84 per cent of Bangladesh's total exports, and over 50 per cent of those exports go to the EU.

After graduation, tariffs on Bangladeshi garments will rise to 9.0-12 per cent under standard EU regulations. The WTO estimates a potential annual export loss of up to 8.0 billion dollars-around 14 per cent of Bangladesh's total exports today.

The three-year grace period granted by the EU until the end of 2029 is seen as a breathing space. It is not. India will continue to enjoy preferential access under existing arrangements and is expected to strengthen its position further through new agreements. Similar trade advantages already exist for Vietnam, Pakistan and Sri Lanka. Once the tariff edge is gone, Bangladesh will have little negotiating leverage left.

The domestic economic backdrop makes the situation more difficult. GDP growth is projected at only 3.9 per cent in FY 2026, private investment is at a five-year low, and the banking sector's non-performing loan ratio exceeds 35 per cent, according to the World Bank and CPD. This is not a position from which to absorb a major trade shock unprepared.

Bangladesh must pursue EU GSP+ eligibility with urgency, establish a professional trade negotiation unit, and make export diversification a core budget priority rather than a rhetorical slogan. Delay without structural change only postpones the crisis. The grace period ends in 2029. That is not far away, and global competition is not patient.

Shahriya Hasan

Student, School of Business, North South University, Dhaka