Govt set to trim levies on 250 tariff lines in rationalisation move
Tariff rates on more than 500 of those lines were reduced over three years
The government is set to lower customs, supplementary, and regulatory duties on approximately 250 tariff lines as part of its ongoing tariff rationalisation initiative, according to finance ministry sources.
The proposed reductions are expected to cover a range of items, including components for solar and electric vehicles, fabrics, live fish and animals. At the same time, tariffs on around 50 HS (Harmonised System) codes, including emerging tobacco products, may be increased.
Despite calls from trade experts to abolish the minimum tariff value imposed on imported products on the grounds that it is inconsistent with World Trade Organisation principles, the government is not planning to withdraw the measure in the upcoming budget, according to officials at the finance ministry.
Keep updated, follow The Business Standard's Google news channel
Officials at the National Board of Revenue said Bangladesh is scheduled to graduate from the least developed country category in November this year. Following graduation, the country is expected to lose duty-free market access in many export destinations, increasing the importance of negotiating free trade agreements and similar arrangements.
Under such agreements, Bangladesh would generally need to provide reciprocal duty-free access for imports from partner countries or regions in exchange for preferential treatment for its exports.
However, Bangladesh's relatively high import tariff regime has been identified as a challenge in that process.
According to World Bank data for 2020, Bangladesh ranked among the countries with the highest average tariff rates globally. At the time, its average tariff rate stood at around 28%, compared with 22.4% in Sri Lanka and 18.1% in India.
The corresponding rates were below 10% in Thailand and Vietnam, 5.6% in Malaysia and 8% in Indonesia. Bangladesh's average tariff rate was also almost three times higher than the 9.79% average for low-income countries.
Gradual reduction under way
Growing concerns over the country's high tariff structure prompted calls for rationalisation during the previous Awami League administration, leading to the formation of a high-level committee. Based on its recommendations, the government has reduced tariff rates over the past three years.
According to NBR officials, the latest round of proposed concessions is unlikely to have a significant impact on revenue collection because most of the products receiving lower tariffs account for relatively small import volumes.
Mostafa Abid Khan, an international trade tariff expert and former member of the Bangladesh Trade and Tariff Commission, emphasised that Bangladesh must reduce its existing high tariff regime to remain competitive in global trade.
"To remain competitive in international trade, Bangladesh must reduce its existing high tariffs. However, the pace of reduction so far is not sufficient," he told The Business Standard.
He added: "Tariffs should not be used primarily as a revenue-generating instrument. They should serve a regulatory purpose, but Bangladesh continues to rely on them as a tool for raising revenue."
Thousands of tariff lines
Bangladesh currently imports products classified under approximately 7,600 tariff lines, and tariff rates on more than 500 of those lines have been reduced over the past three years.
A tariff line is a specific product category used in customs systems to classify imported or exported goods for the purposes of tariffs, trade statistics and regulatory measures. It is generally identified by a unique code based on the internationally recognised Harmonised System and allows authorities to distinguish between broad product groups and more specific items or components.
Tariff lines are utilised to classify specific individual products within broader trade categories. For example, while "electronic goods" represents a broad sector, "mobile phone" forms a distinct subset within it.
To be even more precise, a "smartphone" is assigned its own specific HS code or tariff line. Consequently, the various individual components and spare parts of a mobile phone are also classified under their own distinct HS codes.
