“The UK and Bangladesh relationship is underpinned by the potential of our trade and investment relationship that will help both of our economies to grow”
– Alan Gemmell, UK’s Trade Commissioner for South Asia
This remark not only highlights the significance of the economic connection between the United Kingdom and Bangladesh, but it also sends a strong message of collaboration and connectedness. Since the catastrophic COVID-19 virus struck the globe, the global economy has been in a state of disarray, and the conflict in Ukraine has added another layer of complexity to the catastrophes. But, in this precarious situation, the United Kingdom, which is one of the most prominent impediments to globalization and economic liberalization, has lately experienced several challenging circumstances.
On the other hand, Bangladesh, which is a great example of unwavering persistence and a refusal to give up, has stayed on the path to economic progress while the rest of the world is in a panic. Because of these things, both sides are putting more effort into finding new business opportunities and strengthening the economic ties that tie them together.
The second Bangladesh-UK Trade and Investment Dialogue was held in Dhaka on February 19, 2023. Most significantly, both governments decided to convene the dialogue annually and its Joint Working Group (JWG) frequently. The dialogue was a crucial step in the relationship between the two nations, as both are going through economic changes.
The agenda for the joint working group (JWG) was agreed upon on several issues, paving the way for the existing relationship to be strengthened. Also, the United Kingdom and Bangladesh cover a wide variety of topics pertaining to trade and investment, including mutual impediments to market access and commerce. Moreover, both nations highlighted the significance of the discourse and the joint working group as an important step towards creating an example of joint economic cooperation.
Major outcomes and prospects of the dialogue
In the first place, the conversation itself is a huge result. Due of the acute economic crisis that the globe is now experiencing and the widening gap that exists between the developed and developing worlds, the developing world is almost likely on the verge of collapsing into an economic disaster. As a result, more economic cooperation and conversation is necessary for the international economy, which has been affected by conflict.
In addition, the conflict in Ukraine has brought a new facet to this presumption since it is, after all, the greatest military mission on European land that has taken place since the end of World War II. As a result, the developed nation of the United Kingdom is also feeling the effects of the current economic crisis. Going forward into the years 2023 and 2024, the economy of the United Kingdom is anticipated to be mired in a protracted recession characterized by slowing growth and rising unemployment rates.
The most recent meeting, on the other hand, has introduced a new facet, provided both parties with a sigh of relief, and cleared the way for an expansion of the economic ties that already exist between them in a different sphere.
Second, both the UK and Bangladesh agreed during the discussion that they would want to enhance their trade connection in order to increase their prosperity before and after Bangladesh is no longer considered a Least Developed Countries (LDC). The United Kingdom recognized that Bangladesh’s economy is increasing and that it was able to continue operating normally despite the fact that the worldwide pandemic and the current global economic crisis had had a significant impact on Bangladesh.
Finally, both parties highlight the need of expanding the scope of their existing commercial ties. Although the total trade in goods and services (exports plus imports) between the UK and Bangladesh was £4.4 billion at current prices in the four quarters leading up to the end of the third quarter of 2022, this represents an increase of 45.5% or £1.4 billion from the four quarters leading up to the end of the third quarter of 2021. Also, during the four quarters leading up to the conclusion of the third quarter in 2022, Bangladesh was the United Kingdom’s 50th biggest trading partner, accounting for 0.3% of the country’s overall commerce. The discourse that we are having right now has also placed an emphasis on these possible sectors and has embellished future trade relations depending on the success of these endeavors.
Also, Bangladesh was pleased with the UK’s generous Developing Countries Trade Scheme (DCTS), and it acknowledged the scheme’s part in integrating Bangladesh into the global economy and enhancing the country’s chances for trade and investment. The United Kingdom demonstrated its commitment to international agreements on labor standards and human rights, anti-corruption, climate change, and environmental protection by reflecting on its obligations under DCTS.
Additionally, the United Kingdom and Bangladesh discussed ways in which they could collaborate in areas such as the graduation of LDCs, investment cooperation, pharmaceuticals, ease of doing business, the development of the financial sector, higher education, issues pertaining to taxation, and the protection of intellectual property.
Thus, the United Kingdom urged Bangladesh to investigate the possibility of investing in the services sector of the United Kingdom, which encompasses both financial and professional services.
On the other side, Bangladesh emphasized the significance of the ready-made clothing industry not just to the UK but also to Bangladesh. In addition, under the GSP, the top 20 exports from Bangladesh to the UK are all tied to the textile and garment industries. The UK also described its aeronautical proposal for Bangladesh, which is being driven by the private sector.
Both nations acknowledged the significance of receiving a high-quality education and reached an agreement to further expand the scope of their partnership in the field of higher education for the purpose of maximizing their respective benefits.
The United Kingdom also stressed how essential it was for Bangladesh to establish economic policies and procedures that would assist the country in achieving its objective of achieving rapid, environmentally friendly, and sustainable economic development. Also, it pledged to maintain its collaboration with Bangladesh. Because of this, the central bank of Bangladesh and the government of Bangladesh have both begun the process of reshaping the economic instruments and are searching for an adjustment strategy in order to deal with the issues in a relatively short amount of time.
Importantly, the United Kingdom requested that Bangladesh collaborate with the private sector in the United Kingdom to develop a method for resolving business disputes. This was done so that Bangladesh could make the most of its direct foreign investment.
Even though the United Kingdom is the second largest country in terms of sources of gross foreign direct investment (FDI) flowing into Bangladesh after the United States, the amount of FDI flowing into Bangladesh is on the rise. This is despite the fact that the United Kingdom has a significant amount of FDI in some of the most important industries in Bangladesh.
In 2021, the outbound stock of foreign direct investment (FDI) from the United Kingdom in Bangladesh was 816 million pounds; however, the foreign investment from the United Kingdom stood at $2.5 billion by the end of September 2022. So, the partnership requires a more effective method to deal with the economic challenges, in addition to enhancing the economic connection and accelerating investments.
Last but not least, the trade conversation really resulted in the generation of ideas that were advantageous to both sides by loosening the norms of origin. This was the case in terms of opening new dimensions and experiencing new facilities. Hence, what this indicates is that an increasing number of enterprises in Bangladesh will be able to make use of supply chains and consider their wares to be local when exporting to the market in the UK.
To summarize, the United Kingdom and Bangladesh have been longtime allies due to their shared interests and ideals. There is a strong desire on the part of Bangladesh to take this partnership to a new level via increased economic and commercial collaboration. The global and regional supply networks that Bangladesh is a part of are allowing it to become increasingly integrated into the global economy. The conversation will be beneficial to Bangladesh’s economy, as well as the country’s growth and the creation of new employment. On the other hand, both sides will arrive at a rational solution to the worldwide economic problem and discover a method to enhance commerce at the same time.
– S. M. Saifee Islam is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).
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