The European Union has initiated an assessment of Bangladesh’s proposal for a Free Trade Agreement (FTA), marking an important step toward strengthening long-term economic ties as the country prepares to graduate from Least Developed Country (LDC) status.
The development comes nearly a year after Bangladesh formally requested negotiations with the 27-member bloc, seeking a durable trade framework that would help preserve preferential market access after existing duty-free benefits expire.
According to Bangladesh’s Ministry of Commerce, the EU recently informed Dhaka that it has started an internal review of the proposal. Although no timeline has yet been announced for formal negotiations, officials view the move as a positive signal for future trade cooperation.
Md Abdur Rahim Khan, Additional Secretary (Export) at the commerce ministry, confirmed that the assessment process has begun but noted that the EU has not indicated when discussions on a potential agreement could formally commence.
The proposed FTA has gained increasing importance as Bangladesh approaches its scheduled LDC graduation. Following graduation, the country is expected to continue enjoying preferential access to the European market through a transition mechanism until 2029. Beyond that period, exporters could face import duties of around 10 percent unless an alternative trade arrangement is secured.
The EU remains Bangladesh’s largest export destination, accounting for nearly 60 percent of the country’s total exports. Annual exports to the bloc exceed $25 billion, driven primarily by the ready-made garment sector, which remains the backbone of Bangladesh’s export economy.
Bangladesh currently benefits from the EU’s Everything But Arms (EBA) Scheme, which provides duty-free and quota-free market access for products originating from least developed countries.
The country is the largest beneficiary of the scheme, with exports valued at approximately €19 billion entering the European market under preferential treatment in 2024. The utilisation rate of these trade preferences reached 96 percent, highlighting the programme’s significance for Bangladeshi exporters.
Industry leaders have repeatedly cautioned that losing preferential access could weaken Bangladesh’s competitiveness against rival apparel-exporting countries. Additional tariffs would increase sourcing costs for European buyers and potentially accelerate supply chain diversification.
Trade relations between Bangladesh and the EU have expanded steadily over the past decade. In 2025, bilateral goods trade reached €23.3 billion, making Bangladesh the EU’s 35th-largest trading partner.
Textiles and apparel continue to dominate the relationship, accounting for nearly 94 percent of EU imports from Bangladesh. European exports to Bangladesh are largely concentrated in machinery, industrial equipment, chemicals and technology products.
Services trade has also grown steadily, reaching €1.5 billion in 2024 and bringing total bilateral trade in goods and services to approximately €23.8 billion.
Investment cooperation is strengthening as well. EU foreign direct investment stock in Bangladesh reached €2.5 billion in 2024, supporting sectors including manufacturing, energy, telecommunications and infrastructure.
Business groups have welcomed the EU’s decision to evaluate the proposal. Nuria Lopez, Chairperson of EuroCham Bangladesh, described the development as encouraging for both European and Bangladeshi businesses and emphasised the importance of maintaining strong commercial ties.
Alongside the proposed FTA, Bangladesh and the EU are also negotiating a Partnership and Cooperation Agreement (PCA), which aims to expand collaboration in trade, investment, governance, climate action, sustainable development and human rights.
Trade analysts believe that a future FTA would provide greater certainty for exporters and investors while helping Bangladesh navigate the challenges of post-LDC transition. For the country’s garment industry, which employs millions of workers and generates the majority of export earnings, securing long-term preferential access to the European market remains a strategic priority.
