The “Everything but Arms”(EBA) scheme is a permanent arrangement covering Least Developed Countries (LDC’s) as classified by the United Nations. This arrangement enables duty-free and quota-free access for all products (7200 products in total) originating in LDC’s except for arms and ammunition. Different from the Standard GSP and GSP+, LDC’s are not excluded from the scheme if they benefit from other preferential arrangements. Within the EBA, the EU has intensified its engagement with three EBA beneficiaries: Bangladesh, Cambodia, and Myanmar. This enhanced engagement includes a systematic approach to address shortcomings in fundamental human rights and labour standards. The enhanced engagement countries account for about 87.3% of preferential imports from all EBA beneficiaries.
The garment industry is by far the most important industry for Bangladesh, and it contributes about 80% to the country's total export earnings. This makes Bangladesh the world's second largest exporter of garments. in Since 2013, the annual revenue in this sector increased by about 79% to $34 billion annually.
Apparel and clothing articles, footwear and other textile articles dominate Bangladesh's export sector. These products are followed by fish products, articles made of leather, headgear and hides and skins.
Next to the EU, China, India, and the US are important trading partners for Bangladesh. China and India are the most important sources of imports, accounting for a share of 42%. The EU accounts for over 38% of the exports followed by the US and the UK.
Although the agricultural sector only contributes about 12% to the GDP, it employs the majority of the workforce. Rice remains the most important agricultural product, together with jute and tea. Economic growth was mainly driven by the industrial sector (33.32 %), of which the clothing and garment industry is the most important pillar. Other manufacturing activities include the production of fertilizer, paper, sugar, glass, and aluminium works. Services contribute 51.3% to the GDP rendering it the most important sector for the economy of Bangladesh.
Bangladesh is by far the most important beneficiary from the EBA arrangement. About 97% of Bangladesh's total exports make use of the duty suspensions granted under the EBA.
Total trade with the EU amounted to € 18,569 2021. With a share of 16.7%, the EU is Bangladesh's most important trading partner. Over 38.3% of Bangladesh's exports go to the European market.
Bangladesh is the third largest economy in Southeast Asia, after India and Pakistan. In the last ten years, Bangladesh's economy recorded respectable growth rates of about 6% annually, which is particularly significant given the high dependency on exports and the resulting vulnerability to fluctuations on international markets. Over the same period, EU imports from Bangladesh have quadrupled and amounted to almost 19 billion in 2019. Considering that about 96% of overall imports are eligible for duty suspensions under the EBA scheme, it has directly contributed to Bangladesh's economic growth and development. Bangladesh is scheduled to graduate from LDC status in 2024.
Almost the entire exports of Bangladesh to the European market are eligible for duty suspensions granted by the EBA.
Bangladesh makes use of the duty suspension under the EBA arrangement for about 97.8% of its eligible EU exports.
Bangladesh's preference utilisation rate, which indicates the ratio of eligible to preferential imports, has been consistently high over the past years with an average of over 96%. Likewise, eligible imports increased constantly over time. Looking at individual product sections, Bangladesh makes good use of the duty suspensions granted under the EBA scheme for its dominant import groups like apparel, footwear, and fish products. Product sections which could make better use of the preferential market access include textiles, instruments, and chemicals.
EU imports from Bangladesh remain heavily concentrated on apparel, clothing and textile imports, which account for almost 98% of all preferential imports under GSP. The government makes an effort to further diversify the economy and has identified a number of priority sectors. These include the leather industry, which currently, however, only accounts for less than 1% of preferential imports. Other sectors that were selected to support Bangladesh's economic diversification include jute products, processed foods, fish and crustaceans, as well as consumer electronics.
The EU has started the "enhanced engagement" with Bangladesh due to concerns with the country's overall adherence to human and labour rights as covered by the 15 core conventions included in the GSP regulation. The unilateral trade preferences under the GSP are conditional on the adherence to and the respect of fundamental human and labour rights as specified in the 15 fundamental conventions included in the GSP regulation. The EU is concerned about a number of human rights related developments in Bangladesh which motivate the uptake of the "enhanced engagement". These developments include shrinking space for civil society actors, freedom of expression, the right to peaceful assembly, extrajudicial killings, enforced disappearances and torture, as well as discrimination and violence against ethnic and religious minorities. The EU and Bangladesh address human rights related issues in the Subgroup on Human Rights and Good Governance, which is part of the EU-Bangladesh Cooperation Agreement. The European Commission has asked the government of Bangladesh to improve the freedom of expression and the space for civil society and to better investigate cases of alleged torture, ill treatment, extra judicial killings, and enforced disappearances. With regards to labour rights, the engagement builds on the "Sustainability Compact", an initiative between the EU, the US, Canada, Bangladesh and the ILO which focusses on strengthening the freedom of association, the right to collective bargaining, and the promotion of responsible business conduct. With the "enhanced engagement" the European Commission expects further progress in aligning domestic policies with the fundamental ILO conventions. More particularly, the engagement focusses on the removal of legal obstacles to the right to establish trade unions, the elimination of anti-union discrimination, the facilitation of the trade union registration process, the strengthening of the labour inspectorate, as well as the elimination of forced and child labour. The government has already stepped up its engagement and adopted amendments to its labour law in order to strengthen the freedom of association and collective bargaining. The situation relating to the registration and functioning of the trade unions as well as the labour inspectorate still remains an area of concern. Additionally, the situation related to child labour remains concerning, despite a number of legal amendments.
The EU's bilateral assistance amounted to €655 million for the period 2014-2020, during which the EU particularly supported projects in three focus areas. These included human capital development, food security and nutrition, and democratic governance. Furthermore, the EU was also engaged in initiatives addressing migration and forced displacement, the prevention of violent extremism and the support to civil society and human rights defenders. Other priority areas included gender equality, labour rights, sustainable consumption and production, green growth, as well as climate change mitigation.