Bangladesh books bigger trade surplus with EU

Bangladesh booked higher trade surplus with European Union countries by over 8.0 per cent year on year to $23.6 billion in the past fiscal, although its overall external-trade deficit widened.
The country had an overall external-trade deficit in the year under review of more than $15.2 billion by official count, which further weighs on negative balance-of-payments (BoP) account.

In the fiscal year 2022-23, the BoP deficit was over $8.0 billion, and it contributed to pressures on the country's depleting foreign-exchange reserves. The total inflow from trade in general merchandise from this biggest export destination was recorded $27.4 billion during the period while outflow in the two-way trade was worth $3.8 billion, according to latest Bangladesh Bank (BB) statistics.
This large surplus with the EU mainly accrued from clothing and other exports with the 28-member continental bloc, the data showed.
Bangladesh has also current-account surplus with the bloc. The current account which considers more variables besides the goods' movement stood at $26.9 billion.
One of the major reasons for such large current-account surplus was gains from Bangladeshi workers who stay over there.
The inflow of worker remittance during the period under review was recorded at $3.7 billion. It was $2.9 billion in 2021-22.
Bangladesh's balance of payments with other European countries also remained in favour during the fiscal year. There are 23 countries remaining outside the EU.
The current-account surplus with other European countries, including the United Kingdom (UK), stood at $2.9 billion. The goods and services exports fetched $6.7 billion while the outflow was $3.8 billion, making the net gains.
The EU works closely with Bangladesh in the framework of the EU-Bangladesh Cooperation Agreement, concluded in 2001. This agreement provides a broad scope for cooperation, extending to trade and economic development, human rights, good governance and the environment, according to the European Commission.
Bangladesh has been a WTO member since 1995, and, as a least-developed country, benefits from the EU's 'Everything but Arms' (EBA) arrangement, which grants duty-free, quota-free access for all exports, bar arms and ammunition.
The European Union is Bangladesh's main trading partner, accounting for around 20 per cent of Bangladesh's total external trade. EU imports from Bangladesh are dominated by clothing, while its exports to Bangladesh are dominated by machinery and transport equipment.
Bangladesh's clothing industry gets trade benefits of around 16 per cent which kept its advantageous position with other competing nations.
Economists view that this grouping is the golden goose for Bangladesh as there is no substitute for this, so far.
"Trade with the EU is favourable for duty benefits," says Dr Ahsan H. Mansur, executive director of the Policy Research Institute of Bangladesh or PRI.
He reminds that after 2026 Bangladesh will face challenges on the market, following its LDC graduation. "We have to raise our efficiency to retain the market."
The economist has advocated for taking measures to negotiate on preferential trade with the EU to make up for post-graduation loss of preferential-trade treatments.
"Once we get GSP plus, it will help retain Bangladesh's market there," says Dr Mansur.
However, clothing exporters say supply orders from the 28-member economic bloc now remained slow due to the war in Ukraine.
"We have now poor buy orders from the EU, mainly because of the Ukraine war," Md Nazrul Islam, vice president of BGMEA, told the FE writer.

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