Bangladesh Trade Policy: Evolution, Current State, Future Directions

Trade policy is not a static phenomenon. In Bangladesh, the trade policy regime has evolved over the five decades since independence. The first two decades were lost decades as trade policy simply reflected a legacy of the past inward-looking import-substituting policy of pre-independent Bangladesh. Radical changes in trade policy and market orientation occurred during the 1990s, earning Bangladesh the moniker of “globaliser”. But liberalising policies soon gave way to resurgence of protection through high tariffs and para-tariffs. Trade policy dualism emerged with readymade garment (RMG) exports accorded a free trade channel while non-RMG exports operated under a highly restrictive and protectionist trade regime, which characterises the current state of trade policy. Given the evolving landscape of international trade, geopolitical fragmentation, creeping deglobalisation, and rising populism have been shaping global trade for nearly a decade. These could present potential challenges as well as some opportunities for Bangladesh’s future growth trajectory. As China+1 geopolynomics takes hold as a de-risking alternative to China-sourcing, our RMG industry is well placed to absorb part of the redirected additional demand given its wage competitiveness, underutilised production capacities, and capable swift-footed first-generation entrepreneurs.