£315m tariff savings for Bangladesh's exports to UK hinges on rights issues

Bangladesh will be able to save up to £315m in tariffs annually on exports to the UK under a new trading scheme, according to a study by the British High Commission in Dhaka.

However, realising these benefits under the Developing Countries Trading Scheme (DCTS) will depend on addressing critical issues such as human and labour rights, as well as implementing strong anti-corruption measures.

"Retention of the scheme is also based on respect for human and labour rights through compliance with international conventions, including those on civil and political rights, anti-corruption, climate change, and the environment," British High Commissioner to Bangladesh Sarah Cooke on Tuesday said.

"We will continue to closely monitor these aspects going forward," she said while speaking at an event she hosted for a group of policymakers, researchers and private sector leaders to discuss the scheme at her residence on Tuesday.

Launched in June 2023, the new UK Developing Countries Trading Scheme (DCTS) replaced the old Generalised Scheme of Preferences (GSP).

Sarah Cooke also said it is very clear that the export sector has been a major driving force for Bangladesh's remarkable socio-economic development over the last three decades.

"I am confident that Bangladesh will make the best use of the opportunities provided by the DCTS and the trade relationship between the two countries will reach new heights."

The UK is the 3rd largest export destination of Bangladesh and the export volume amounted to $5.3 billion in FY23.

Bangladesh will also get duty-free access on everything except arms under the Comprehensive Preferences tier till 2029. The country will benefit from more generous rules of origin compared to the previous GSP system.

Under the DCTS, Bangladesh will automatically move to the Enhanced Preferences tier in 2029, which will provide duty-free access to 98% of Bangladesh's exports to the UK, including garments.

In his presentation, Dr Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development (RAPID), showed that through this new scheme, Bangladesh's exports can boost in the UK market and reach more than double by 2030 to $11 billion.

He also highlighted some challenges including standard and testing issues, supply-side constraints, lack of automation, infrastructure, good governance, overreliance on import tariffs, and policy discrimination.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), welcomed the new scheme and said, "We are diversifying our product within the garment sector including introducing man-made fibre."