About the project

Partner: The Friedrich-Ebert-Stiftung (FES)
Project duration: April 2024 - November 2024

As a regional bloc, the European Union (EU) is the largest export destination for Bangladesh. The EU emerges as the primary source of preferential trade benefits, with European markets accounting for more than 80 per cent of Bangladesh's trade preferences. Over 90 per cent of Bangladesh's exports to the EU comprise ready-made garments. As reported by the WTO database, the EU has emerged as a focal point for regional trade agreements (RTAs), solidifying its standing with a total of 45 RTAs that encompass both developed and developing nations. Among others, the EU has Economic Partnership Agreements (EPAs) and Comprehensive and Enhanced Partnership Agreements (CEPAs) with many developing countries. The EU's FTAs with other developing countries can create significant competitiveness pressure on Bangladesh. This is especially so as Bangladesh, after its graduation from the group of LDCs in 2026, is likely to lose LDC-related EBA trade preferences by 2029 since the EU currently provides an additional three- year transition period for graduating LDCs. Against this context of Bangladesh's losing trade preferences, the EU and Viet Nam have entered into an FTA 2020, and the EU's FTA negotiations with two other important apparel exporters, namely India and Indonesia, are currently underway. In this context, this proposed study will conduct empirical/quantitative research to analyse the nature of competition and price competitiveness between Bangladesh and Viet Nam using disaggregated product-level data. This analysis will also help determine the extent to which any potential tariff-preference disadvantage can impact Bangladesh.

Specific Objectives:

• Conduct a comprehensive analysis of the EU-Viet Nam Free Trade Agreement and its impact on Bangladesh
• Provide an empirical analysis of the price competitiveness between Bangladesh and Viet Nam's exports in the EU market
• Compare the export competitiveness of Bangladesh and Viet Nam in the EU with other markets, e.g., the United States, where neither country receives duty-free market access in apparel, to provide further insights into the role of preferential market access in export competitiveness
• Analyse emerging developments with potential implications for the bilateral trade and economic relationship between Bangladesh and the European Union
• Prepare relevant recommendations for improving Bangladesh's export competitiveness to address the challenges
• Facilitate stakeholder engagements to inform them of the potential implications of the emerging issues and necessary policies to mitigate any adverse impact