Bangladesh to get duty-free access to Japan mkt for 3 yrs after graduation – The Financial Express

Japan’s Extension of Preferential Trade Treatment for Bangladesh and its Alignment with Sustainable Development Goals

A recent amendment to Japan’s tariff system ensures that Bangladesh will retain duty-free market access for three years following its graduation from Least Developed Country (LDC) status in 2026. This policy decision, formally communicated to the World Trade Organisation (WTO), represents a significant contribution to global partnerships for sustainable development and directly supports Bangladesh’s progress towards several Sustainable Development Goals (SDGs).

Details of the Tariff System Reform and Contribution to SDG 8

Japan’s reform of its Temporary Tariff Measures Law was formally notified to the WTO on November 5 and acknowledged by the WTO’s Committee on Trade and Development on November 7. The reform is a direct implementation of Japan’s Generalised System of Preferences (GSP), which is designed to foster economic growth and industrialization in developing nations, aligning with the objectives of SDG 8 (Decent Work and Economic Growth).

• The amendment allows countries to receive special preferential tariff treatment for up to three years after graduating from the LDC category.
• This measure aims to promote export income and industrial capacity, which are critical drivers for achieving sustained and inclusive economic growth.
• The extension provides stability for Bangladesh’s key export sectors, particularly the garment industry, safeguarding employment and economic momentum.

Implications for Economic Stability and SDG 1 (No Poverty)

The continuation of trade privileges is crucial for Bangladesh’s smooth transition to developing nation status. Without such extensions, Bangladeshi exports would face significant tariffs, potentially undermining a primary source of national income and employment, thereby impacting progress on SDG 1 (No Poverty).

• Post-graduation, standard tariffs could range from 9.0% to 20% in key markets.
• Specific potential tariffs include: 12% in the EU, 11.5% in the UK, 16.2% in Canada, and 9.0% in Japan.
• The stability provided by the extended duty-free access helps maintain the competitiveness of Bangladeshi goods, protecting the livelihoods of millions of workers and supporting poverty reduction efforts.
• Export earnings from garments to Japan have already shown significant growth, rising from US$478.48 million in FY2012-13 to US$1.18 billion in FY2024-25, demonstrating the value of this trade relationship.

Global Partnerships for Sustainable Development (SDG 17)

Japan’s action is part of a broader international effort to support LDCs through their graduation process, reflecting a global commitment to SDG 17 (Partnerships for the Goals). This collaborative approach ensures that development gains are not reversed by sudden economic shocks.

1. The 2023 WTO Ministerial Conference established a consensus that trade benefits for LDCs should continue for three years post-graduation.
2. The European Union, United Kingdom, Canada, and Australia have confirmed a similar three-year grace period for Bangladesh until 2029.
3. China has also committed to extending LDC privileges for two years after graduation.

The Transition Period: A Call for Action on SDG 9 (Industry, Innovation, and Infrastructure)

Industry leaders and policy experts emphasize that the three-year transition period must be utilized to enhance Bangladesh’s intrinsic competitiveness. This involves strategic investments and reforms that align with SDG 9 (Industry, Innovation, and Infrastructure) to build a resilient and sustainable industrial base.

• Enhance Port Efficiency: Improving infrastructure is critical for reducing lead times and costs.
• Reduce Production Costs: Lowering utility and borrowing rates will boost industrial competitiveness.
• Increase Productivity: Focusing on innovation and efficiency within the manufacturing sector is essential for long-term viability.

These domestic measures, supported by continued international partnerships, will be vital for ensuring Bangladesh’s economic trajectory remains positive and aligned with its sustainable development objectives long after the transition period ends.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth: The article’s core theme is sustaining Bangladesh’s economic momentum through trade. It discusses how duty-free market access helps to “expand export income, industrialise, and foster economic growth,” which are central to SDG 8. The focus on the apparel industry’s competitiveness also relates to sustaining jobs and economic activity.
• SDG 17: Partnerships for the Goals: The article is fundamentally about international partnerships for development. It details the trade relationship between Bangladesh (an LDC) and developed countries like Japan, the EU, UK, and Australia. Japan’s decision to amend its tariff system and notify the World Trade Organisation (WTO) is a clear example of global partnership in action to support LDCs.
• SDG 9: Industry, Innovation and Infrastructure: The article touches upon the need for industrial and infrastructural improvements for Bangladesh to remain competitive post-graduation. It explicitly mentions the necessity to “boost port efficiency, reduce production costs,” and “enhance productivity,” which are key components of SDG 9.
• SDG 1: No Poverty: Although not explicitly mentioned, the entire context of supporting a Least Developed Country’s (LDC) economic transition is intrinsically linked to poverty reduction. The export earnings and industrial growth discussed are primary drivers for lifting people out of poverty in a country like Bangladesh.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 17.12: Realize timely implementation of duty-free and quota-free market access on a lasting basis for all least developed countries, in accordance with World Trade Organization decisions.
   • Explanation: This is the most direct target addressed. The article’s main subject is Japan’s decision to extend “duty-free market access” for Bangladesh for three years after it graduates from LDC status. This action by Japan, along with similar moves by the EU, UK, and Australia, is a direct implementation of this target to ensure a smooth transition for a graduating LDC.
2. Target 8.a: Increase Aid for Trade support for developing countries, in particular least developed countries.
   • Explanation: The extension of preferential trade treatment, such as Japan’s Generalised System of Preferences (GSP), is a form of “Aid for Trade.” It is a non-monetary support mechanism that helps LDCs like Bangladesh build trade capacity and increase exports, directly aligning with this target’s objective.
3. Target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization.
   • Explanation: The article mentions that Japan formally notified the World Trade Organisation (WTO) of its tariff system reform and that the WTO’s Committee on Trade and Development acknowledged the measure. This highlights the role of the WTO in governing international trade rules and ensuring that measures like these are transparent and integrated into the global system.
4. Target 9.a: Facilitate sustainable and resilient infrastructure development in developing countries through enhanced financial, technological and technical support.
   • Explanation: The article quotes an industry expert stating that the transition period must be used to “boost port efficiency.” This directly points to the need for infrastructure development to support trade and industry, which is the focus of this target.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article mentions several quantitative and qualitative indicators:

• Indicator 17.12.1: Average tariffs faced by developing countries, least developed countries and small island developing States.
  • Explanation: The article provides specific data points for this indicator. It states that without the extended preferences, Bangladeshi garments could face tariffs of “9.0 per cent in Japan, 12 per cent in the EU, 11.5 per cent in the UK, and 16.2 per cent in Canada.” The extension of duty-free access means the applicable tariff remains 0% for the grace period, which is a measurable outcome.
• Value of Exports:
  • Explanation: The article provides concrete data on export performance, which is a key indicator of the success of trade preferences. It states, “Bangladesh earned US$1.18 billion from garment exports to Japan in FY2024-25, up from $478.48 million in FY2012-13.” This data directly measures the growth in export income, a primary goal of the GSP scheme.
• Industrial Competitiveness Metrics (Implied):
  • Explanation: The article implies the need for indicators to track industrial competitiveness. It mentions the need to “reduce production costs,” “lower utility and borrowing rates,” and “enhance productivity.” These can be measured through metrics like manufacturing cost per unit, industrial electricity tariffs, commercial interest rates, and output per worker, respectively.
• Infrastructure Efficiency (Implied):
  • Explanation: The call to “boost port efficiency” implies the use of indicators such as container dwell time, vessel turnaround time, and logistics performance indices to measure progress in trade-related infrastructure.

4. Table of SDGs, Targets, and Indicators

Source: thefinancialexpress.com.bd