Key sectors in Bangladesh are setting their sights on maintaining zero-duty access to the European Union market after the country graduates from its Least Developed Country (LDC) status in November 2026. The EU is a vital trading partner for Bangladesh, absorbing 45.6% of its exports in 2023. The country is the largest beneficiary of the EU's "Everything But Arms" (EBA) arrangement, which grants duty-free, quota-free access to the EU for exports of all products except arms and ammunition. In 2023, 90% of Bangladesh's exports eligible for tariff reductions entered the EU at preferential rates, with an overall 91% utilization rate. This translates to €17.1 billion in exports benefitting from these preferences.
The Ready-Made Garment (RMG) sector, the primary driver of Bangladesh's export economy, is particularly keen on retaining this access. In 2023, textiles constituted approximately 94% of the EU's imports from Bangladesh. While the EU's average tariff is generally low at 2-3%, the average tariff for textiles is 12.3%. Due to the EBA agreement, Bangladesh has become the second-largest clothing exporter to the EU, after China.
Following graduation from LDC status, Bangladesh will have a three-year grace period until November 2029 where it can still avail the EBA benefits. Beyond this period, Bangladesh aims to qualify for the EU's Generalised Scheme of Preferences Plus (GSP+), the tier below EBA, which grants duty-free access for 66% of EU tariff lines. To obtain GSP+ status, Bangladesh must meet vulnerability and sustainable development criteria. However, even if Bangladesh meets these criteria, safeguard measures associated with textiles and clothing imports could potentially exclude Bangladesh's apparel exports from benefiting from duty-free market access.
To strengthen EU-Bangladesh ties, EU Ambassador to Bangladesh Michael Miller recently emphasized the need for consistent policy stability and a level playing field for EU operators. During the EuroCham Business Evening 2026 in Dhaka, he also urged the completion of reforms initiated by the interim government. EuroCham Chairperson Nuria Lopez highlighted the chamber's advocacy efforts in Brussels regarding GSP+ and a potential Free Trade Agreement (FTA) in the future.
While Bangladesh seeks to maintain preferential access to the EU market, challenges remain. A conflict between the country's textile mills and garment exporters has surfaced regarding zero-duty yarn imports. The commerce ministry is considering suspending the duty-free facility for yarn imports to protect domestic producers, but garment exporters fear this would cripple their competitiveness.
Moreover, an analysis of Eurostat data indicates that the average price of apparel exported from Bangladesh to Europe fell by 2.06% between January and September 2025. Intensified competition in the European market has led to price discounts from Bangladeshi exporters. Despite these challenges, trade experts anticipate no major short-term disruptions to Bangladesh's exports or imports.
The EU remains committed to supporting Bangladesh's trade and development. In 2023, total trade between the EU and Bangladesh amounted to €23.9 billion. The EU's foreign direct investment (FDI) stock in Bangladesh reached €2.1 billion in 2023, while Bangladesh's FDI in the EU was €95 million. The EU and Bangladesh are currently engaged in negotiations for a Partnership and Cooperation Agreement (PCA) aimed at establishing a comprehensive framework to strengthen bilateral relations.
