Dewan Mashuq Uz Zaman
If Bangladesh had a full FTA with the EU like India, its exports would be more secure and predictable, even after LDC graduation in 2026. The deal could cover goods, services, and investment, encourage local sourcing through stricter rules of origin, and align regulatory standards with Europe. It would protect market share, attract investment, and help diversify industries, giving Bangladesh a stronger role in global supply chains.
Like we explored in our February edition, India’s free trade deal with the European Union has already changed the rules of the game for Indian exporters. Now imagine Bangladesh with a similar agreement. Not just duty‑free access, but a full Free Trade Agreement covering goods, services and investment. Today Bangladesh relies on the EU’s Everything But Arms scheme, which gives most exports duty‑free entry while it remains a least developed country. That access is strong, but it is temporary, and the stakes are rising as graduation from LDC status approaches. According to EU trade data, Bangladesh was the EU’s 36th largest trading partner in 2024 and the bloc remains the country’s largest export destination, with textiles making up most imports from Bangladesh.
Bangladesh’s export picture to Europe is huge, with ready‑made garments and textiles accounting for the lion’s share of export value. In the first eleven months of 2025, EU imports of Bangladesh’s garments hit about $18.05 billion, a near 8 percent increase from the same period in 2024. That strong performance underlines how much of Bangladesh’s growth depends on EU market access.
If Bangladesh had secured an FTA with the EU earlier, export security would look very different. Under the current scheme duty‑free access depends on LDC status, and will only remain until about November 2029 after graduation in late 2026. Unless a new deal is signed, tariffs averaging around 8 to 12 percent could hit Bangladesh’s exports after that transition, making products less competitive compared with rivals’ duty‑free shipments. A formal FTA would lock in duty‑free access through treaty, giving exporters confidence to plan long term and expand into other goods such as leather products, furniture, and frozen foods as well as services.
Trade under a full FTA would be broader than it is today. Bangladesh’s current arrangement focuses on goods and benefits granted unilaterally by the EU. A comprehensive treaty would include access for services and stronger protections for investment. Bangladeshi firms in logistics, software and other sectors could find smoother entry into European markets while European investors might expand local operations under clearer legal safeguards.
The rules of origin that come with an FTA would also reshape Bangladesh’s manufacturing landscape. Today the relaxed rules under the existing scheme let Bangladesh qualify for duty‑free access even when fabric is imported and garments are made locally. Under an FTA, products would need to meet agreed criteria for value added and origin, encouraging more domestic sourcing and strengthening upstream industries.
Regulatory alignment would be part of a deal too. The EU enforces strict environmental, product safety and labour standards. Right now, compliance happens at the point of export. With a trade pact, Bangladesh would work with the EU to meet many standards in advance, reducing delays at borders and raising quality across export sectors. That could improve worker conditions and environmental outcomes as part of broader economic reform.
India and the EU finalized their free trade agreement in January 2026 after nearly two decades of negotiations it is and described as one of the largest deals of its kind and gives Indian exporters duty‑free or preferential access on roughly 96 to 99 percent of traded goods. This opens huge opportunities for India’s textiles and other products in Europe and makes competition sharper for Bangladesh, which has enjoyed zero‑duty access under the current scheme.
Bangladesh’s graduation from LDC status is a turning point. Without a free trade agreement of its own, exporters could find markets tilted in favour of competitors long before 2029. Industry analysts warn that if Bangladesh keeps exporting with tariffs while India and Vietnam continue with zero‑duty access, the impact on market share could be significant.
In a world where Bangladesh had an EU FTA like India’s, economic ties would be deeper and more balanced. Access to services markets would grow, investment flows would rise, and industries would gain long‑term certainty. Benefits would extend beyond just tariff removal into clear mechanisms for resolving disputes and stronger legal protection for investors. That could transform Bangladesh’s role in global value chains as the country steps into a middle‑income future.
Bangladesh may still pursue such a deal with the EU. If it succeeds, it would secure hard‑earned access to Europe and open new chapters in trade and development. The question now is not whether a free trade agreement with the EU is needed but how quickly it can be negotiated and implemented.
