Canada Extends Duty-Free Access to Bangladesh Until 2034

28 Aug, 2023

Canada Extends Duty-Free Access to Bangladesh Until 2034

Bangladesh's favorable trade relations with Canada have been extended until 2034, following the passage of a bill in the Canadian parliament in June. The extension maintains duty-free access to the Canadian market for Bangladesh, a significant development benefiting the country's exports.

The Canadian government's decision to prolong duty-free market access to all developing nations, including Bangladesh, post-its graduation from Least Developed Country (LDC) status in 2026, is part of the General Preferential Tariff (GPT) scheme. This initiative encompasses relaxed rules of origin for apparel items and provides duty-free access for various other products as well. Furthermore, the extended program introduces the concept of extending market access benefits based on industries' adherence to labor and environmental standards.

Faruque Hassan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), lauded this development as a significant boost for the country's industry transformation towards a more sustainable and environmentally conscious workplace. He expressed optimism that this policy decision will also contribute to Bangladesh's overall infrastructure development.

Hassan stated, "It's time for us to take our bilateral trade to a new height." The Export Promotion Bureau (EPB) data indicates Canada as the 11th largest export partner of Bangladesh, with exports worth $1.72 billion in FY23. Canada is a significant market for Bangladeshi apparel, with RMG exports reaching $1.55 billion in FY23, displaying a growth of 16.55% from the previous fiscal year.

The upcoming transition is especially noteworthy, as Bangladesh has enjoyed full duty-free and quota-free access in Canada under the Least-Developed Country Tariff (LDCT) scheme since 2003. As the GPT scheme is renewed every decade, the current version is set to expire by the end of 2024. Hassan emphasized that the BGMEA has been actively engaged in discussions with key trade partners to ensure a seamless transition after the graduation from LDC status. Positive feedback has been received from Australian government officials regarding the continuation of duty-free market access post-graduation.

Shams Mahmud, Managing Director of Shasha Denims, highlighted the significance of this extension, especially in replacing the restrictions that come with the LDCT. He explained that, previously, Bangladesh had to adhere to stringent rules of origin requiring a 25% value addition for GSP facilities. With the introduction of GPT+, these limitations will be replaced, marking a positive shift for the country. Mahmud expressed optimism about these changes, stating that Bangladesh is well-equipped to meet the social, environmental, and safety criteria required by the industry.