Article By: Faria Nuzhat
Canadian Duty-Free Trade Benefits Likely to Continue for Bangladesh’s Garment Exports Despite Graduation to Developing Nation Status
An influential entrepreneur has indicated that Bangladesh’s garment exports to Canada could retain their duty-free trade advantages even after the nation graduates to the status of a developing country. This would make Canada the third country, following the United Kingdom and Australia, where Bangladesh maintains preferential trade treatment post its graduation from the group of least-developed countries (LDCs) in 2026.
This development aligns with Canada’s intention to extend duty-free market access to developing nations under the General Preferential Tariff (GPT) Plus scheme. The current scheme is set to conclude by the end of 2024, with Canada expected to introduce the GPT Plus scheme starting from January 1, 2025.
Bangladesh has enjoyed duty-free and quota-free access to the Canadian market since 2003 through the Least-Developed Country Tariff (LDCT) scheme. However, this trade benefit is anticipated to cease following the LDC graduation.
Nonetheless, with the adoption of Canada’s new trade scheme, Bangladesh is poised to retain duty benefits until the conclusion of the new scheme in 2034. Faruque Hassan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), affirmed this projection.
Canada represents a substantial market for Bangladesh’s garment manufacturers. In the fiscal year 2022-23, apparel exports to Canada reached $1.55 billion, marking a 16.55 percent year-on-year growth compared to the previous year.
Apparel items constitute over 95 percent of Bangladesh’s exports to Canada, with potential for further market expansion. The BGMEA noted that Canada’s imports from Bangladesh make up 13.95 percent of its imports, indicating room for increasing market penetration.
Faruque Hassan emphasized the importance of leveraging the GPT Plus scheme to maximize potential and grow market share.
The newly proposed Canadian scheme seeks to broaden product coverage under the GPT program. It grants additional tariff benefits to developing nations that meet and progressively enhance their adherence to international labor rights and environmental standards, extending to products not currently covered by the GPT, such as apparel, footwear, and ships.
Notably, Canada’s parliament has already approved the extension of the GPT scheme until the end of 2034.
Hassan highlighted Bangladesh’s progress in workplace safety and environmental sustainability. The country has established 200 apparel factories certified by the United States Green Building Council, with plans for another 500 factories to achieve the same recognition.
Hassan expressed confidence that Bangladesh’s improved labor standards will meet the conditions necessary for trade benefits under Canada’s new scheme.
Furthermore, he called for other countries and trade blocs, such as the European Union, to extend similar facilities to graduating LDCs like Bangladesh.