South Korea is unlikely to grant duty-free quota-free (DFQF) market access to Bangladeshi products after the latter graduates from least-developed country (LDC) status in 2026.
The East Asian country has already informally informed the Bangladesh Embassy in Seoul that it is reluctant to grant DFQF access in favor of Bangladeshi products, according to a letter from the embassy.
The Republic of Korea is also likely to come under pressure from countries that have signed free trade/preferential trade agreements with the developed country if the facility is granted independently to Bangladesh even after it exits the LDC club, hints the letter.
To overcome possible export shocks from the developed market, the embassy suggested that the government should fix its position and work out the next action plan for this purpose by conducting a feasibility study with stakeholders.
On March 31, 2021, the Bangladesh mission requested the Korean Ministry of Commerce, Industry and Energy to form a joint feasibility study team on the implementation of the free trade agreement ( ALE), but the Ministry has not yet informed the mission of the matter.
He emphasized taking decision as soon as possible on FTA/PTA to ensure trade preference in the market after LDCs exit in 2026, as any type of trade agreement involves a long-term process. .
The Bangladesh Embassy foresees a negative impact on Bangladesh’s exports to the Korean market, as most Asian countries have already entered into regional and bilateral agreements with South Korea.
In addition, Bangladeshi products will enter the Korean market as expensive products if they are not granted DFQF access by the East Asian country after LDC graduation.
If the DFQF facility is not maintained, it will discourage Koreans from investing in Bangladesh, he said.
The mission to Bangladesh recommended asking the Korean authorities to maintain the DFQF mechanism for Bangladeshi products until the conclusion of any FTA or PTA with the country. Korea has expanded its DFQF facility for LDCs (Least Developed Countries).
Currently, it provides duty-free market access to Bangladesh in 95% of tariff lines.
Bangladesh and South Korea are members of the Asia-Pacific Trade Agreement (APTA).
The two countries have long enjoyed good bilateral trade relations.
Bilateral trade between Bangladesh and Korea has already exceeded $2 billion.
Bangladesh’s exports to South Korea totaled $398.66 million in the 2020-21 financial year, according to the Export Promotion Bureau (EPB).
Realizing the urgency, the government is trying to ensure duty-free market access to a good number of countries after graduation from LDCs, as many developed countries will not continue to enjoy duty-free treatment in the post era. -PMA, said a Commerce Ministry official.
“Many countries want to establish trade relations with us. But we cannot exploit the potential of a lack of momentum,” he added.
Currently, Bangladesh has been granted access to the DFQF market of developed countries and advanced developing countries as a member of the World Trade Organization (WTO), known as the Generalized System of Preferences (GSP).