Reflecting on the EU-Bangladesh relationship on Europe Day
Bangladesh and the European Union have long been sharing a friendly relationship, which has grown stronger and warmer over time.
Since the establishment of formal diplomatic ties in 1973, both Bangladesh and the EU have come a long way and witnessed socio-economic changes over the long four decades.
The EU has established itself as the largest trade bloc in the world — average GDP per capita in the EU has almost doubled over the past 20 years.
In the meantime, Bangladesh has also attained remarkable socio-economic development and appeared as a model of development.
Evolving from the rubble of the devastating war in 1971, the country now has an expanding economy with macroeconomic stability, 7%+ annual average GDP growth, robust performance of exports, and strong foreign currency reserves.
The EU has consistently been a trusted partner of development of Bangladesh, and has contributed to attaining the status of middle-income country. Now we need to focus on how the partnership between Bangladesh and the EU could be further deepened in the future, especially when Bangladesh is on track for confirming its presence in the middle-income country club by 2024.
Figures and policies in our favour
The EU is a major player in the global economy in terms of trade and investment. The trade bloc is also the top trading partner for 80 countries. Also for Bangladesh, the EU continues to be a strong trading partner and a source of investment for more than four decades. The EU’s imports from Bangladesh reached $19.35 billion in 2016-2017 fiscal year, accounting for around 55.84% of Bangladesh’s total trade.
It is mainly due to the trade preferences Bangladesh gets from the EU under its “everything but arms” arrangement, which grants duty free, quota free access for all exports, except arms and ammunition.
It’s encouraging to note that our trade with the EU is growing. EU’s imports from Bangladesh have almost trebled from $7.5bn to $19.3bn in the period between 2008-2007 and 2016-2017 fiscal years. The accumulated growth of Bangladesh’s exports to the EU was 156.27% in the last 10 years.
Currently, apparel is the main export item of Bangladesh, which represents around 92% of our total exports to the EU. In recent times, frozen food, agri-products, footwear, leather products, and bicycles have also appeared to be promising items of export to the EU market. On the other hand, Bangladesh is also a potential market for the EU whose major export items are machinery, transport equipment, and chemicals.
The EU’s exports to Bangladesh almost doubled in the last 10 years from $1.87bn to $2.83bn. The EU relaxed the rules of origin (RoO) in 2010 and brought it from 2-stage to 1-stage work processing for apparel, making it more favourable for our ready-made garment exports to the EU under Generalized System of Preferences (GSP) scheme.
Under the revised RoO, apparel exporters are enjoying duty-free access to the EU even if the apparel is made of imported fabrics. This has helped our apparel industry to register robust growth in the EU market in recent years and to secure 63% share of our total garment exports to the world.
The EU has been a major partner of the development of Bangladesh’s garment industry, not only as a major importer, but also through its contribution to build capacity of the industry.
The EU’s role to support our garment industry to improve workplace safety, labour rights, and general business conduct is widely acclaimed.
Progress and achievements
In 2013, the EU together with Bangladesh government, the ILO, and the US, adopted the Sustainability Compact, which has facilitated remarkable progress in the apparel industry in terms of workplace safety.
Bangladesh has achieved a paradigm shift in workplace safety in its garment industry where the Accord on Fire and Building Safety in Bangladesh, an initiative by leading EU brands and retailers sourcing garments from Bangladeshi factories, played a crucial role.
All export-oriented apparel factories have been inspected for structural, fire, and electrical safety by Accord, Alliance, and the National Initiative. Remediation is nearing completion, as the progress is around 83% in Accord affiliated factories and 88% for Alliance. We believe our safety standards will encourage European brands to source more garments from Bangladesh.
The EU is not only a trading partner of Bangladesh but also a good friend who assists our country to address various challenges on the way to development.
Apart from economic and trade development, the EU provides support to Bangladesh for human and social development, good governance, and human rights.
EU ‘ssupport to Bangladesh also covers environment and disaster management, as well as food security and nutrition. We have witnessed how the EU has come forward to help us deal with the Rohingya issue and provided 13 million euros in the wake of the refugee crisis.
However, Bangladesh is gradually becoming economically strong, and we believe in the near future Bangladesh would reach a stage when development assistance would no longer be necessary.
Since Bangladesh is on its way to attain the status of a middle-income country, the country will require strong industrial development and investment to realize its vision.
The government has been working to accelerate industrial growth in the country by formulating business-friendly policies and building necessary infrastructure. Roads and highways are being upgraded, while steps are taken to enhance the capacity of sea ports.
Electricity generation has been increased to meet the growing demand of the expanding industrial sector, while an LNG terminal is being built to address the energy requirement in the country.
The government is also working to make Bangladesh a preferred destination of investment. Foreign investment in Bangladesh has hit a record in 2016-17 fiscal year, which was $2.45bn. Initiatives have been taken to simplify business processes in Bangladesh, and to improve our ranking in the World Bank’s Doing Business Index.
The government has taken massive steps to develop 100 economic zones in next 15 years. Besides, we have a young and vibrant population which is a valuable asset to our country for investors.
The backward and forward linkage industries to the garment sector, man-made fibre based high-end textiles, pharmaceuticals, and footwear and leather products, frozen foods, ship-building have become promising industries in Bangladesh where foreign investment can be highly feasible.
Bangladesh has immense opportunities to diversify its export items, and the EU can play a key role in enabling Bangladesh to tap into those potentials. The EU can extend its support in enhancing Bangladesh’s supply side capacity and promoting export-oriented FDI flows to Bangladesh.
The time is ripe for shaping the EU-Bangladesh relationship in line with the demands of the changing times.
We hope this relationship will reach a newer height, where the EU will be a strong and reliable partner in Bangladesh’s journey towards prosperity, driven by trade and investment.