The World Bank has advised Bangladesh to adopt a gradual, phased strategy toward tariff restructuring, which entails lowering duties on intermediate production inputs, scaling back protective barriers for heavily shielded consumer commodities, and implementing a publicly signaled, multi-year elimination of para-tariffs to enhance the nation's commercial competitiveness.

These policy suggestions were outlined in a fresh World Bank research publication titled “Bangladesh Trade Policy at a Crossroads: Evidence for the National Tariff Policy, LDC Graduation, and the Next Generation of Trade Agreements,” which was showcased today by Dr Nora Dihel, the World Bank’s Senior Economist for Macroeconomics, Trade and Investment, during an event hosted in the capital.

The gathering was jointly convened by the Policy Research Institute of Bangladesh (PRI) and the World Bank Group at the PRI’s Banani premises.

The research report advises that Bangladesh progressively curtail remaining regulatory charges and supplementary duties—collectively termed para-tariffs—ultimately aligning its import duty architecture closer to those maintained by regional trade rivals like India, China, and Vietnam.

Data from fiscal year 2026 cited in the study indicates that Bangladesh’s trade-weighted average Most Favoured Nation (MFN) tariff rests at 7.0 percent across 5,666 distinct tariff lines, though factoring in para-tariffs elevates the average nominal protection level to 15.4 percent.

This discrepancy proves especially pronounced in industries such as footwear, raw hides and skins, stone and glass articles, and transportation gear, where nominal protection in the footwear sector, for example, surges to 70.4 percent against a baseline MFN tariff of 25 percent.

To cushion the fiscal impact accompanying diminished import levies, the World Bank advised coupling tariff adjustments with strengthened domestic revenue generation mechanisms.

Furthermore, the institution advocated for dismantling non-tariff trade bottlenecks, opening up the services sector, and extending transitional adjustment assistance to domestic workers and industries vulnerable to trade liberalization shocks.

Employing its specialized Tariff Reform Impact Simulation Tool (TRIST), the World Bank calculated that a standalone 10 percent slash in customs duties would contract import tax receipts by approximately USD 189 million.

Simultaneously executing this 10 percent duty cut alongside the complete eradication of para-tariffs would elevate the fiscal deficit to roughly USD1.4 billion.

The analysis projects that an absolute abolition of both standard customs duties and para-tariffs would entail a fiscal contraction of about USD3.7 billion, representing 40.8 percent of overall import tax collections or 0.83 percentage points of the national gross domestic product.

Consequently, the World Bank emphasized the necessity of a meticulously sequenced reform blueprint rather than pursuing abrupt reductions in border tariff protections.

The assessment additionally urges Bangladesh to pursue comprehensive bilateral and multilateral trade pacts to prepare adequately for its impending graduation from Least Developed Country (LDC) classification.

While Bangladesh's formal transition out of LDC status is officially slated for November 24, 2026, the administration has formally petitioned for an extension of at least three years.

Findings indicate that unilateral trade reforms—specifically targeting deeper reductions in input duties and removing para-tariffs on intermediate items—could expand real GDP by up to 0.52 percent.

Meanwhile, adopting an aggressive multi-partner free trade pact agenda benchmarked against Vietnam's commercial agreements could lift real GDP by 0.73 percent, translating to roughly USD 3.2 billion, with roughly two-thirds of those economic dividends stemming from pacts forged with Regional Comprehensive Economic Partnership (RCEP) and ASEAN member economies.

The World Bank recommended that Bangladesh pair domestic tariff overhauls with a proactive commercial diplomacy strategy aimed at securing preferential export access and broadening integration into regional and global trade networks following LDC graduation.

The high-level seminar convened policymakers, prominent economists, academic researchers, and commercial sector leaders to deliberate on the country's National Tariff Policy, LDC graduation milestones, and forthcoming trade pact architectures.

PRI Chairman Dr Zaidi Sattar presided over the proceedings, while Md Fazlul Hoque, Administrator of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), participated as the chief guest alongside other notable industry figures.

The session concluded with closing observations delivered by PRI Distinguished Fellow Dr Ahsan H. Mansur.