Eroding tariff preference to hit growth in exports to EU
Thursday, 5 November 2009
FE Report
The country's export growth to the European Union (EU) market faces the danger of being eroded as the regional block is cutting tariffs multilaterally, imperiling Bangladesh's price edge, trade officials and exporters feared Wednesday.
Commerce Minister Muhammad Faruk Khan also shared the similar views and said the current export growth is threatened by erosion of preference as the tariff preference margin is on the steady decline under global trading rules.
But a trade adviser with the European Commission played down the fear, saying Bangladesh could do business, beating its competing nations, even if the trade edge dwindled.
"The multilateral removal of trade barriers would erode the price advantage that the preferential access now confers, and would expose countries like Bangladesh … to fierce competition," Mr Khan said as he opened a seminar in the city, devoted to EU-Bangladesh trade relations.
The EU remains the country's number one trading
partner, with merchandise shipment making up as much as 50 per cent of Bangladesh's total export earnings.
Of the total exports, a staggering 87 per cent constitutes apparel items while less than five per cent fisheries.
Official statistics say the regional block of 27 nations is also a major source of imports, accounting for about 9.0 per cent of total imports.
The commerce minister said the growth of exports to the EU over the years is due to EBA (Everything but Arms) introduced in 2001 as an amendment to the Generalised System of Preferences (GSP).
Under the GSP, products originating from Bangladesh and 50 other poorer nations can enter the EU market duty-free and quota-free.
But, Mr Khan said, stringent origination rules along with sanitary restrictions are holding back further growth.
He urged the EU to take up remedial measures to help Bangladesh promote exports, build infrastructure and improve product quality.
The minister, however, said Bangladesh's apparel industry managed to ride out the storm of the elimination of decades-long quota regime, thanks in large part to the EU's trade preferences and duty-free facility.
Mr Stefan Frowein, head of the Delegation of the EC, sought to assuage the fears of private sector leaders and has noted that Bangladesh's share of the EU's clothing imports is close to 8.0 per cent, placing the country ahead of its competing countries except China and Turkey.
"Yes, Bangladesh is already ahead of India on that score!" Mr Frowein told the business audience.
Other than tariff edge erosion, the problem of nitrofuran contamination in the shrimp exports to the EU is another major impediment to trade expansion in fisheries sector.
The commerce minister also raised the alarm that it was becoming another major deterrent.
Mr Zillul Hye Razi, trade adviser at the Delegation, insisted that Bangladeshi exporters were well-positioned to beat their Asian counterparts as they were doing the same in case of the US market.
Mr Jennie Lundmark, a trade programme officer at the delegation, also presented a paper at the seminar, moderated by Andrew Barnard, first secretary with the Delegation.
Mr Barnard, who oversees the Delegation's trade, economic and political affairs, said quality is the key to sustaining exports in the world market.
The country's export growth to the European Union (EU) market faces the danger of being eroded as the regional block is cutting tariffs multilaterally, imperiling Bangladesh's price edge, trade officials and exporters feared Wednesday.
Commerce Minister Muhammad Faruk Khan also shared the similar views and said the current export growth is threatened by erosion of preference as the tariff preference margin is on the steady decline under global trading rules.
But a trade adviser with the European Commission played down the fear, saying Bangladesh could do business, beating its competing nations, even if the trade edge dwindled.
"The multilateral removal of trade barriers would erode the price advantage that the preferential access now confers, and would expose countries like Bangladesh … to fierce competition," Mr Khan said as he opened a seminar in the city, devoted to EU-Bangladesh trade relations.
The EU remains the country's number one trading
partner, with merchandise shipment making up as much as 50 per cent of Bangladesh's total export earnings.
Of the total exports, a staggering 87 per cent constitutes apparel items while less than five per cent fisheries.
Official statistics say the regional block of 27 nations is also a major source of imports, accounting for about 9.0 per cent of total imports.
The commerce minister said the growth of exports to the EU over the years is due to EBA (Everything but Arms) introduced in 2001 as an amendment to the Generalised System of Preferences (GSP).
Under the GSP, products originating from Bangladesh and 50 other poorer nations can enter the EU market duty-free and quota-free.
But, Mr Khan said, stringent origination rules along with sanitary restrictions are holding back further growth.
He urged the EU to take up remedial measures to help Bangladesh promote exports, build infrastructure and improve product quality.
The minister, however, said Bangladesh's apparel industry managed to ride out the storm of the elimination of decades-long quota regime, thanks in large part to the EU's trade preferences and duty-free facility.
Mr Stefan Frowein, head of the Delegation of the EC, sought to assuage the fears of private sector leaders and has noted that Bangladesh's share of the EU's clothing imports is close to 8.0 per cent, placing the country ahead of its competing countries except China and Turkey.
"Yes, Bangladesh is already ahead of India on that score!" Mr Frowein told the business audience.
Other than tariff edge erosion, the problem of nitrofuran contamination in the shrimp exports to the EU is another major impediment to trade expansion in fisheries sector.
The commerce minister also raised the alarm that it was becoming another major deterrent.
Mr Zillul Hye Razi, trade adviser at the Delegation, insisted that Bangladeshi exporters were well-positioned to beat their Asian counterparts as they were doing the same in case of the US market.
Mr Jennie Lundmark, a trade programme officer at the delegation, also presented a paper at the seminar, moderated by Andrew Barnard, first secretary with the Delegation.
Mr Barnard, who oversees the Delegation's trade, economic and political affairs, said quality is the key to sustaining exports in the world market.