Bangladesh is increasingly dependent on the exports of apparel products with its total share standing more than 90 per cent to the European Union (EU) last year.
Even only four to five items account for nearly 90 per cent of the country's total readymade garment exports to the EU market, thus making the export diversification drive "mere rhetoric", diplomats, trade experts and business leaders told a roundtable Thursday.
Against this backdrop, they underscored the need for expansion of the country's export basket to reap the benefit of the new trade preference scheme, already unveiled by the executive arm of the 25-member bloc.
The Bangladesh Chapter of the International Chamber of Commerce (ICC) organised the roundtable on "New GSP: Impact on EU-Bangladesh Trade" in the city, with its president Mahbubur Rahman in the chair.
With focusing on a simpler GSP, the new Generalised System of Preferences (GSP), as it is called, will give tariff preferences to vulnerable countries that meet the objective criteria for sustainable development and good governance.
The new GSP plus, which came into force from January this year, will remain unchanged until 2008.
While presenting a paper on the new GSP, First Secretary of the EC Charles Whiteley insisted that Bangladesh would not be affected if the new trade preference scheme was enforced.
"EBA (Everything But Arms) continues to apply for Bangladesh. Basically, for Bangladesh, there will be no change," Whiteley told a business audience.
Generous tariff rates, simpler GSP, improved RoO, transparent graduation mechanism and new incentives for sustainable development and good governance are among the features of the Brussels-based club's trade preference initiative, Whiteley explained.
But Whiteley's comments drew guarded welcome from MA Taslim, who teaches economics at Dhaka University.
Bangladesh will be affected as apparel items from some Andean and Central American countries would enjoy duty-free access to the EU market, Taslim, a former chairman of the Tariff Commission, said.
He also questioned whether the new GSP plus scheme is compliant with the regulations of the World Trade Organisation (WTO).
In response, Political and Economic Officer of the Delegation Zillul Hye Razi said the GSP+ was WTO-compliant.
Whiteley claimed that the rules, set to be applied some time this year, would be simpler and more development friendly. However, the old RoO (Rules of Origin) remain valid.
He also said there will be additional relaxation of the conditions to apply cumulation of origin "within coherent regional groupings".
But the Delegation official said the EU might ask exporters to confirm authenticity of export certificates and other related information.
Speaking at the roundtable as the chief guest, Charge d' Affairs of Delegation of the European Commission (EC) to Bangladesh Anthony Goodwin said Brussels was examining the rules of origin (RoO) with regard to its trade preference scheme in order to make those simpler and more development friendly.
Terming the exercise "a highly complex" one, Goodwin said there were divergent views among different sectors even here in Bangladesh.
But the delegation official insisted that the exercise would be characterised by "transparency" and the local industry players would be allowed to articulate their views before a proposal was placed on the table.
Goodwin claimed the EU's trade preference is a pivotal plank in its efforts to promote development and the integration of developing countries into the global marketplace.
"… We have consistently sought to use the GSP instrument as a means to encourage other trading players to pursue positive global policies," Goodwin said, citing the examples of the step to fight against drug production, trafficking, and environmental pollution.
"More recently, the promotion of human rights has been incorporated as a pivotal aspect of the new GSP plus scheme," he noted.
Laying emphasis on a fair global trade regime, Goodwin said the European Commission (EC) "pushed strongly at the recent WTO ministerial in Hong Kong for developed countries, notably the US, to extend the same duty-free and quota-free access to all products from the poorer nations".
"A pledge along these lines with some room for manoeuvre afforded to developed countries was included in the Hong Kong Declaration," he added.
Goodwin held out the assurance that the EC would continue to act as an advocate for what he called "meaningful concessions" by the developed countries in this field.
Mahbubur Rahman hoped that the new GSP along with a simple and relaxed rule would usher in new opportunities for a poor country like Bangladesh.
Referring to Bangladesh's confusion over the EU's general system of preferences, the ICC, B chief said: "The warring sub-sectors of the textile industry blurred the potential advantage of the regional cumulation in other sectors".
Rahman suggested that the country's business leaders should view the new GSP rules holistically brushing past the narrow sectoral interest.
President of the Metropolitan Chamber of Commerce and Industry (MCCI) Latifur Rahman said Bangladesh's apparel industry thrived, thanks mainly to the entry of a group of successful entrepreneurs in the sector that wins bread for 1.8 million workers.
"We need to sustain and keep growing this industry," he opined.
President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Mir Nasir Hossain called upon the EU to relax the RoO under the new GSP, given the country's socio-economic condition.
President of the Dhaka Chamber of Commerce and Industry (DCCI) MA Momen voiced his concern over tagging conditions such as protection of human rights, corruption and good governance with the EU's new trade preference programme.
Painting a gloomy picture of the country's export performance in the EU market during the quota-free regime, Research Director of the Centre for Policy Dialogue Mustafizur Rahman said exports of apparel items, particularly the woven ones, registered a negative growth during the period.
"Although the country's overall export posted a nine per cent growth in the post-MFA period, it marked a negative growth as far as the EU market is concerned," the CPD official said.
He hoped that the EU's Everything But Arms (EBA) would be included in the multilateral trading system.
Former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Annisul Huq suggested that the government should take a decision whether it would go for regional cumulation in view of plummeting woven exports to the EU market.
He set off the alarm bell that even the country's knitwear exports might decline after 2008.
President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlul Hoque said the country must diversify its export basket.
He acknowledged that the knitwear exporters were in a dilemma whether or not they would opt for the new RoO under the EU's GSP plus scheme.
But he maintained that there was no need for making the existing RoO more flexible as far as knit sector was concerned.
Bangladesh shipped merchandise worth 4.0 billion euros to the EU market upto November of 2004 making it the country's one of the largest export destinations.
Among others, Minister of political and economic affairs of the Swedish Embassy Hans Nicklasson, former adviser to the caretaker government Rokia A Rahman, and Team Leader of the EU trade support programme Herve Terlier were present at the meeting.