The Financial Express

Dhaka's access to GSP-plus subject to rights and governance reforms: EU

| Updated: October 21, 2020 13:56:47

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Bangladesh will not get the 'Generalised Scheme of Preferences (GSP)-Plus' facility until it implements the 27 core UN conventions on labour reforms, human rights and governance, says the European Union (EU).

The message was conveyed on Tuesday during a virtual high-level policy meeting between Bangladesh and the EU, the largest destination of the country's exports, people familiar with the development told the FE.

The Bangladesh side told the meeting it has already ratified 26 of the 27 core conventions required to avail the GSP-plus facility, but the EU officials made it clear that ratification is not enough.

"The EU wants implementation of all the core reforms," a senior official, who took part in the meeting, told the EF.

From the Bangladesh side, foreign, commerce and labour secretaries, and senior officials of the ministries attended the meeting.

The EU side was led by Paola Pampaloni, deputy managing director of the External Action Service.

Bangladesh is set to lose its current privilege of zero-duty export benefit under the EU's Everything But Arms (EBA) scheme after its transition from a least-developed country to a middle income country status.

The deadline was set initially in 2024, but as the EU gives three years' grace period to ensure a smooth transition, the country will finally lose the existing EBA facility in 2027.

If Bangladesh loses the preferential treatment, it will have to face nearly 12.5 per cent duty on exports to the EU, where annual export stands at $22 billion.

In this circumstance, Bangladesh is lobbying for getting the GSP-plus facility to continue to avail the duty-free export facility, commerce ministry officials said.

In the meeting, Bangladesh has told the EU it has ratified all the core conventions, except one related to child labour.

This one will also be done soon, they added.

The meeting mainly concentrated on labour rights, an official of the foreign ministry told the FE, adding further meetings will be held soon.

According to data, around 74 per cent of Bangladesh's export earnings fall on the preferential trade as an LDC, of which, 64 per cent comes from the EU.

According to reports, Bangladesh's exports will decline by 5.7 per cent annually if the EBA is not extended and the local exporters will have to face an 8.7 per cent duty to the EU.

Some 74 per cent of Bangladesh's export earnings come under the preferential trade as an LDC. Of the percentage, 64 per cent comes from the EU and 10 per cent from Japan, Canada and other developed countries.

Bangladesh's export will decline by 5.7 per cent annually if the EBA is not extended.

"EU officials said Bangladesh needs to make sure that its export products are ILO-compliant and, compliant with the EU standards. They also said they are evaluating the practices of Bangladesh on the core conventions and this will determine whether the GSP Plus status will be granted or not after the formal graduation," a senior official said.

"They said Bangladesh has made a number of commendable changes in terms of workplace safety in the garment sector, but more progress is needed in the sector, especially with regard to the labour rights reform," said the official

The GSP+ scheme is designed to help developing countries face the special burdens and responsibilities resulting from the ratification of 27 core international conventions on human and labour rights, environmental protection and good governance.

GSP+ grants full removal of tariffs on over 66 per cent tariff lines covering a very wide array of products, including textiles and fisheries.

There are currently eight GSP+ beneficiaries such as Armenia, Bolivia, Cape Verde, Kyrgyzstan, Mongolia, Pakistan, Paraguay and the Philippines.

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