Trade Policies and Pattern in Bangladesh

Team: Dr. Monzur Hossain (Team Leader) and Dr. Narayan Chandra Nath

Sponsor: International Food Policy Research Institute (IFPRI)

This study analyzes various trade liberalization policies implemented in Bangladesh in phases and examines how the policies have contributed to overall trade performances. It also analyzes comparative advantages of Bangladeshi products, evolving markets and within that context, highlights the issues that may be addressed in the short-to-medium term period to harness trade potentials. It also provides attention to different aspects of food trade in Bangladesh.

The trade liberalization was done in steps in Bangladesh. Historically, Bangladesh has been maintaining a restrictive trade regime since her independence in 1971. In the early decade of independence, Bangladesh followed an import substitution industrialization strategy. During the decade, trade regime was characterized by high tariffs and quantitative restrictions on imports. Partial liberalization of the trade regime started in the middle of the 1980s under structural adjustment reforms initiated by the World Bank and the International Monetary Fund. The major objective of the trade reform was to encourage exports by reducing the anti-exports bias. The progress in trade liberalization was slower in the 1980s, particularly with respect to reductions in import tariffs. 

Bangladesh pursued extensive reform measures in the 1990s. The various reform measures included simplification of import procedures, reduction and harmonization of tariff rates on similar products, gradual reduction of non-tariff barriers, removal of restrictions on repatriation of profit and income from foreign investment etc. The highest customs duty rate was reduced from 350 percent in 1990 to 32.5 percent in 2003 and 25 percent in 2011. At present, most of the quantitative restrictions are applicable to non-trade grounds such as health, environment, culture, national security etc. The number of operative tariff slabs was reduced from 24 in the 1980s to 5 in 2010, and the (un-weighted) average customs duty rate was reduced from 100 percent in 1985 to 57 percent in 2000, and afterwards 15 percent in 2010.