European Union has begun assessing Bangladesh’s proposal for a Free Trade Agreement (FTA), marking a significant step in efforts to preserve preferential market access for the South Asian nation as it prepares to graduate from least developed country (LDC) status.
The assessment comes nearly a year after Bangladesh formally requested negotiations with the 27-member bloc, seeking a long-term trade arrangement that would safeguard exports after existing duty-free benefits expire. Officials say the move reflects growing recognition on both sides of the importance of maintaining strong economic ties amid changing global trade dynamics.
According to the Ministry of Commerce, the EU informed Bangladesh earlier this month that it would initiate an internal review of the proposal. While Brussels has not yet announced a timetable for launching formal negotiations, the development is being viewed as a positive signal for future trade cooperation.
“The EU has started assessing our proposal,” said Md Abdur Rahim Khan, additional secretary (export) at the commerce ministry, adding that the bloc has not specified when discussions on an agreement could begin.
The proposed FTA has become increasingly important as Bangladesh approaches a critical transition period in its economic development. The country is scheduled to graduate from the United Nations’ LDC category on November 24 this year unless its request for a three-year deferment is approved by the relevant UN bodies.
Following graduation, Bangladesh will continue to receive preferential access to the European market under a transition arrangement until 2029. However, exporters could face import duties of around 10 percent after that period if a new trade framework is not secured.
For Bangladesh, the implications are substantial. The European Union remains the country’s largest export destination, accounting for nearly 60 percent of total exports. Annual shipments to the bloc exceed $25 billion, driven primarily by the ready-made garment sector, which serves as the backbone of the nation’s export economy.
Bangladesh currently benefits from the EU’s Everything But Arms (EBA) scheme, which grants duty-free and quota-free access to products from least developed countries.
The country is the largest beneficiary of the programme, with exports worth approximately €19 billion entering the European market under preferential treatment in 2024. The utilisation rate of those benefits reached 96 percent, underscoring the importance of the arrangement for Bangladeshi businesses.
Industry leaders have long warned that losing preferential access could weaken Bangladesh’s competitiveness against rival apparel-exporting nations. Additional tariffs would raise costs for European buyers and could encourage sourcing diversification at a time when global apparel brands are increasingly reassessing supply chains.
The EU-Bangladesh trade relationship has expanded considerably over the past decade. In 2025, total trade in goods between the two partners reached €23.3 billion. Bangladesh ranked as the EU’s 35th-largest trading partner, accounting for 0.5 percent of the bloc’s total goods trade.
Textiles and clothing continue to dominate bilateral commerce. Nearly 94 percent of EU imports from Bangladesh consist of apparel and textile products, reflecting the country’s position as one of the world’s leading garment exporters. European exports to Bangladesh, meanwhile, are concentrated in machinery, industrial equipment, chemicals and technology-related products.
Trade in services has also grown steadily. According to European Commission data, services trade between the two sides reached €1.5 billion in 2024, bringing total trade in goods and services to approximately €23.8 billion.
Investment ties are also strengthening. EU foreign direct investment stock in Bangladesh stood at €2.5 billion in 2024, supporting sectors such as manufacturing, energy, telecommunications and infrastructure. Bangladesh’s investment stock within the EU was comparatively modest at €86 million.
Business groups have welcomed the EU’s assessment of the FTA proposal. Nuria Lopez, chairperson of EuroCham Bangladesh, said discussions on a potential agreement are encouraging for both Bangladeshi and European businesses.
She noted that Bangladesh’s leadership has already expressed strong interest in an FTA with the EU and said private-sector stakeholders are actively engaging with policymakers to demonstrate the commercial benefits of such an agreement. Lopez is expected to travel to Brussels next month to advocate for closer trade relations and support future negotiations.
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Alongside the proposed FTA, Bangladesh and the EU are also negotiating a Partnership and Cooperation Agreement (PCA), a broader framework aimed at enhancing cooperation in trade, investment, governance, climate action, sustainable development and human rights.
Trade analysts say an eventual FTA would provide greater certainty for exporters and investors while helping Bangladesh navigate its transition from LDC status. Such agreements have become increasingly important as countries seek to secure market access amid evolving regulatory requirements and growing competition in global trade.
For Bangladesh’s garment industry, which employs millions of workers and generates the majority of export earnings, maintaining preferential access to Europe is viewed as a strategic necessity. As the 2029 deadline approaches, the EU’s assessment of the FTA proposal represents a crucial first step toward securing the long-term future of one of Bangladesh’s most important economic partnerships.
