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Bangladesh along with other least developed countries (LDCs) will benefit from the new European Union Generalised System of Preference (GSP) regulation, which is set to be unveiled in October next.
The regulation to be effective from January 1, 2006 through 2015 also offers good news for the country's ready-made garment sector as it might impose certain regulations on the RMG exports from China and India, which are Bangladesh's main competitors.
Under the regulation, there will be three schemes instead of the existing five, with the focus on offering as many preferences as possible to the EU imports from the LDCs.
The EC delegation in Bangladesh informed the government about the draft regulation and it is seeking opinion from the commerce ministry and the private chambers and associations.
Under the proposed regulation, the EU is set to graduate the most competitive groups of products from certain countries. "The focus would be on the LDCs to which preferences should be granted as widely as possible."
A graduated product means it would no longer be given preferential treatment. "Given the high level of competitiveness, there is no justification for these products to continue to benefit from preferential tariff treatment for these countries," the EC said.
The EC also announced that graduation should also play an important role in regulating trade flows for textile products and clothing following the abolition of textile quotas from January 1, 2005.
"It means that RMG exports from Bangladesh will be benefited under the EU GSP in the upcoming quota-free era while exports from China and India could be slapped with certain regulations or capping measures," a competent source said commenting on the proposed regulation.
In October, 2003, an EC Communication had stressed the need to target preferences on countries that would need them most when the MFA (Multi-Fibre Agreement) textile quota system came to an end in December, 2004.
Besides, the new regulation also proposes a cross-regional cumulation for rules of origin so that the exporting country could enhance regional cooperation.
The regulation is expected to be ratified by the European Economic and Social Committee of the European Parliament in October this year.
The GSP facilities of the European Commission started in 1971 and today 176 countries are its beneficiaries. The present cycle of the EUGSP is set to expire on December 31, 2005.
In 2002, the EU imported goods worth 53.2 billion euro under the GSP schemes. In contrast, the US imported goods worth only 16.6 billion euro under the same facilities.
China, India and Indonesia are the biggest beneficiaries of the EUGSP as in 2002 China's share was 33.1 per cent of the total EUGSP imports, India's 11.5 per cent and Indonesia's 4.8 per cent.
Bangladesh is the biggest beneficiary among the LDCs. In 2002 its share in the EUGSP imports was 3.6 per cent.
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