Dhaka to seek WTO's net food importer status

Infograph: TBS

The government has decided to apply to the World Trade Organization (WTO) for the status of a net food-importing developing country (NFIDC), which, commerce ministry officials say, will allow Bangladesh to provide subsidies on agricultural and food exports even after its LDC graduation.

The withdrawal of trade preferences and tariff benefits post-LDC graduation is feared to negatively impact the country's export trade.

In this situation, the government has decided to get Bangladesh included in the list of NFIDCs so that it can continue facilitating exports of agricultural and food products through subsidies, commerce ministry officials told TBS.

To this end, the government will officially inform the WTO about the country's imports and exports of food and agricultural products from this year, they added.

According to WTO rules, a country can be recognised as a net food-importing country if its imports of agricultural and food products exceed their exports in three out of five consecutive years.

All types of edible items are considered food products by the WTO.

Md Hafizur Rahman, director general of the WTO Cell of the Ministry of Commerce, told TBS, "We will send information on exports and imports of food products to the WTO for the first time in December this year. Hopefully, Bangladesh will be included in the list in 2025, and will be allowed to provide cash assistance on agricultural and food exports till 2030."

Even though Bangladesh imports several times more food and agricultural products than what it exports every year, the government did not take any initiative to get the country enlisted as an NFIDC before, because being a least developed country (LDC) it could provide subsidies on exports.

Trade analysts have welcomed this move by the government that is aimed at retaining export capacity post-LDC graduation.

But, at the same time, they have issued warnings that subsidies on exports cannot be provided in this way forever.

Instead, the government and exporters should follow good agricultural practices, good hygiene practices, and good manufacturing practices from production to shipment levels and ensure the quality of domestic products by setting up international-standard accredited laboratories in order to boost agricultural and food exports, they added.

Bangladesh provides up to 20% cash assistance on the exports of various types of agricultural and food products, which is basically an export subsidy.

Bangladesh mainly exports vegetables, fruits, frozen fish, crabs, prawns, aromatic rice, soybeans, and rice bran oil among agro products. The government has imposed a ban on the export of major food products including rice, wheat, and lentils.

According to data obtained from the Export Development Bureau, Bangladesh exported agricultural products worth $1 billion, and frozen and live fish worth $533 million in fiscal year 2021-22, while its imports of food products amounted to $8.3 billion – including $2.56 billion worth of rice and wheat, and $5.78 billion worth of other food items – in the same fiscal.

Mostafa Abid Khan, former member of the Bangladesh Trade and Tariff Commission, endorsed the initiative to apply for the NFIDC status, saying, "Bangladesh will be able to provide subsidies in the agricultural sector including on fertilisers and irrigation after LDC graduation, but it cannot provide any kind of subsidies on exports.

"Therefore, the commerce ministry has taken the initiative to get the country enlisted as a net food-importing country as part of the government's efforts to maintain export competitiveness by continuing to subsidise agriculture and food products, which is very logical."

Echoing him, Zahid Hussain, former lead economist of the World Bank's Dhaka office, told TBS that the inclusion in the WTO list of net food-importing countries means taking an extra few years to achieve competitiveness in the exports of agricultural and food products by continuing subsidies.

"As such, the initiative is fine," he said.

Farmers in our country cannot survive without subsidies from the government. Countries in Europe also subsidise their farmers heavily, he observed, adding, "But the benefits of subsidising exports will not last forever, which is why we need to achieve competitiveness. Food productivity needs to be increased.

"At the same time, it is necessary to establish good agricultural practices, certification, and modern labs to increase export capacity."

The noted economist stressed completing all preparations before 2030 to overcome the supply-side constraints to increase the export of agricultural and food products.

MA Razzaque, research director of the Policy Research Institute, also termed the government's decision to get Bangladesh enlisted as a net food-importing developing country as "very timely".

If Bangladesh is included in this group, opportunities will be created for the country to get various types of trade support and food assistance during the ongoing food crisis around the world, apart from the go-ahead to continue subsidies on the export of food products, he maintained.

According to the WTO Agreement on Subsidy, a country can provide export subsidies even after its graduation from the LDC status if its per capita income is less than $1,000 considering 1990 as the base year, mentioned MA Razzaque, adding that as such, the per capita income of Bangladesh is still well below $1,000.

Sixty-four developing countries are currently eligible as beneficiaries of the NFIDC Decision on the basis of a list established by the WTO Committee on Agriculture, according to the WTO.

This list comprises the forty-eight least-developed developing countries as recognised by the UN Economic and Social Council.

The other 16 nations in the list are WTO member developing countries that notified their request to be listed and have submitted relevant statistical data concerning their status as net-importers of basic foodstuffs during a representative period. These countries are Barbados, Côte d'Ivoire, Dominican Republic, Egypt, Honduras, Jamaica, Kenya, Mauritius, Morocco, Peru, Saint Lucia, Senegal, Sri Lanka, Trinidad and Tobago, Tunisia, and Venezuela.

In the course of the Uruguay Round negotiations of the General Agreement on Tariffs and Trade (GATT) in 1986 on agriculture, a group of net food-importing developing countries raised concerns that the benefits of agricultural trade liberalisation and reform could be diminished or outweighed in the short to medium term as structural surpluses in many developed countries declined and world market prices recovered from the artificially low levels that had prevailed as a result of dumping and extensive use of export subsidies.

In response to these concerns, and as an integral part of the Uruguay Round outcome, Ministers at Marrakesh in 1994 adopted a Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries (the NFIDC Decision).