Rising geopolitical tensions in the Middle East could potentially escalate into a third world war situation, strengthening Bangladesh’s case for delaying its graduation from the least developed country (LDC) category, Policy Research Institute of Bangladesh (PRI) Chairman Zaidi Sattar said.
He made the remarks at a discussion titled “Macroeconomic Insights: Global Turbulences and a Rise in External Sector Vulnerabilities”, organised by PRI in collaboration with the Australian government’s Department of Foreign Affairs and Trade (DFAT), according to a press release.
“Recent geopolitical tensions contain all the ingredients that could potentially escalate into a third world war situation,” he said.
Given the current global uncertainty, insisting on Bangladesh’s immediate graduation from the LDC category simply because it has met the criteria would not make much sense for the United Nations system, he said.
He added that Bangladesh’s request to defer its graduation has gained stronger justification and the timeline could be extended by one or two years, similar to the deferment granted during the Covid-19 pandemic.
Sattar said Bangladesh is currently dealing with three major trade arrangements that could significantly shape the country’s economic trajectory.
One relates to the evolving United States–Bangladesh trade arrangement, which has not yet been fully ratified but already involves commitments from the Bangladesh government.
He said a recent United States Supreme Court ruling removing reciprocal tariffs offered some positive news for Bangladesh.
However, a 15 per cent tariff currently imposed on Bangladeshi exports is applied on top of the existing Most Favoured Nation (MFN) tariff, making the overall situation less favourable.
Sattar said the Buy America Important Act 2025 could create opportunities for Bangladesh’s garment exports.
“If Bangladesh imports American cotton and uses it to produce knitwear or woven garments, those products may receive zero tariff treatment in the United States,” he said.
He also described the proposed Economic Partnership Agreement (EPA) with Japan as a relatively generous arrangement.
Japan has offered zero tariff access for about 19 per cent of Bangladesh’s exports, including ready made garments, while more than 90 per cent of Bangladeshi exports could receive preferential access, he said.
However, he warned that the recently concluded free trade agreement (FTA) between India and the European Union (EU) could pose significant challenges.
“The biggest shock is the EU–India FTA,” he said.
Although Bangladesh is not directly part of the agreement, Indian exports will gain stronger access to the EU market, intensifying competition for Bangladeshi garments.
Sattar said Bangladesh may eventually need to pursue its own free trade agreement with the EU, although such negotiations could take several years to complete.
