Experts on Tuesday urged Bangladesh to overhaul its trade protectionism, warning that the country’s high tariff structure and reliance on hidden border taxes severely threaten its global competitiveness and economic future.
The high-level workshop, titled "Bangladesh Trade Policy at a Crossroads: Evidence for the National Tariff Policy, LDC Graduation, and the Next Generation of Trade Agreements," was jointly organized by the Policy Research Institute of Bangladesh (PRI) and the World Bank.
The dialogue centered on how the nation can navigate its upcoming graduation from Least Developed Country (LDC) status and negotiate future Free Trade Agreements (FTAs).
Delivering the keynote presentation, Nora Dihel, senior economist at the World Bank, presented preliminary findings on Bangladesh’s import duty structure.
While Bangladesh's trade-weighted average Most Favored Nation (MFN) tariff stood at 7.0% in FY2026, average nominal protection surged to 15.4% once regulatory and supplementary duties—known as "para-tariffs"—were included.
These para-tariffs effectively double the cost of doing business in key sectors like footwear, hides, and transportation equipment, adding 20 to 45 percentage points to tariff rates.
Since these border taxes apply to raw intermediate inputs alongside finished goods, they drive up production costs for domestic manufacturers and severely erode export competitiveness.
Experts at the dialogue emphasized that maintaining the status quo is no longer viable, particularly as Bangladesh prepares for LDC graduation.
"Doing nothing is no longer an option for Bangladesh," stated Zaidi Sattar, chairman of PRI, who chaired the session. "Reforms pay for themselves and can generate higher GDP and employment outcomes."
Sattar highlighted the stark "anti-export bias" created by domestic market protection, noting that the ex-ante Average Nominal Protection Rate actually reaches 28%—with half stemming from para-tariffs—and average trade taxes reach 55%.
He warned that under its current tariff structure, Bangladesh will struggle to sign meaningful FTAs with major trading partners, risking severe disadvantages compared to regional competitors like Vietnam and India.
Echoing the call for drastic policy changes, Ahsan H Mansur, distinguished fellow at PRI, advocated for a systematic phase-out of customs duties over five years.
"If we eliminate all customs duties in a phased manner, we may lose $3 billion in revenue, but what is $3 billion for a $400-500 billion economy?" Dr. Mansur argued.
"The hassle and cost of collecting this $3 billion is probably $30 billion to the economy. A bold move like this could change the whole paradigm and attract investment."
Businesses demand transparency and infrastructure support
Representing the business sector, chief guest Md Fazlul Hoque, administrator of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), agreed that tariff rationalization is necessary, but stressed that administrative measures alone cannot safeguard industries.
Hoque pointed to recent uncoordinated administrative moves, such as a Customs order restricting cotton-yarn imports, as evidence that policymakers must improve transparency and consult the private sector—especially SMEs.
"High tariffs and administrative measures alone cannot protect industries. They must be complemented by efforts to improve productivity, competitiveness, reliable energy, better infrastructure, and access to finance."
Panelists including Fahmida Khatun (CPD), Prof Selim Raihan (Sanem), Mohammad Abdur Razzaque (Rapid), Kamran T Rahman (MCCI), and Anwar-Ul-Alam Chowdhury (BCI) further emphasized that trade reforms must go hand-in-hand with domestic revenue mobilization, NBR modernization, and compliance with global standards like the EU Carbon Border Adjustment Mechanism.
Concluding the session, Khurshid Alam, executive director of PRI, reiterated that tariff reform is not a standalone remedy.
He urged policymakers to broaden the national trade strategy far beyond the readymade garment (RMG) sector to foster broad-based, long-term economic growth.