Implications of LDC Graduation for Agricultural Exports from Bangladesh
Bangladesh's impending graduation from the Least Developed Countries (LDC) category is a significant achievement but will result in the loss of LDC-specific trade preferences. While most studies on LDC graduation focus on the readymade garment sector, the trade rules and market access for agricultural goods differ notably. This study assesses the potential impact of graduation on agricultural exports, considering changes in market access and export support provisions. Post-graduation, average tariffs on Bangladesh’s agricultural exports are expected to increase by 11 percentage points in India, 6 percentage points in the EU, 3 percentage points in the UK, 10 percentage points in China, and 5 percentage points in the Republic of Korea. A partial equilibrium analysis shows such tariff hikes in Bangladesh’s seven major GSP donor countries could result in a decline of 6-11 per cent in exports, while simulations from a general equilibrium model suggest a decline of about 4 per cent. Despite the limitations of both models, tariff hikes are widely recognised as having adverse implications for export performance. As Bangladesh’s agricultural exports are relatively small, the potential adverse implications will be limited. Nonetheless, Bangladesh should proactively engage with major preferenceproviding countries to seek extended preferences or favourable market access post-LDC graduation. The scope for improved and strengthened domestic support for agriculture can be utilised to promote agricultural exports, as Bangladesh’s domestic support for agriculture is below the WTO’s Agreement on Agriculture threshold. Bangladesh should pursue classification as a net food-importing developing country, enabling it to exercise certain policy flexibilities to support agricultural exporters. Regardless of LDC graduation, improving farm-level competitiveness and productive capacity is critical for export expansion.