The European Commission’s new Generalized Scheme of Preferences (GSP) proposal is likely to put pressure on Bangladesh’s woven garment exports as it only focuses on eligibility for preferences under the GSP + scheme which requires an increase local added value.
At present, Bangladesh’s ready-to-wear industry is 60% dependent on imported fabrics, and to reduce this dependence, the sector needs to develop local woven textile industries, said the Association of Manufacturers and Exporters. of Bangladesh Clothing (BGMEA).
“We have about 10 years on hand to strengthen the backward linkages of synthetic fiber clothing and it is possible to do it within that time frame,” said Abdullah Hil Rakib, director of BGMEA, at a conference press Saturday.
“We are also ahead of many countries in the sustainability index required to achieve the SPG + after LDC graduation. In addition, we already have a vertical configuration in knit-based garments. Now we just need to improve the backward link for artificial fiber, ”Abdullah said. Hil Rakib, Managing Director of the Team Group.
He added that it is possible to improve synthetic fiber articles if the government provides political support.
Bangladesh has requested a 12-year grace period to recover from the impacts of Covid-19 even though an LDC country has three years of EBA (event but weapons) facilities after graduation.
The BGMEA observed that the new EC proposal gives Bangladesh the possibility of obtaining GSP + facilities in the EU market after the LDCs exit, as it proposes to remove the criterion of the share of imports – which reaches now 7.4% – while Bangladesh’s total exports are around 26%. compared to those in the EU.
On September 21, the European Commission submitted a new SPG proposal which will be discussed in the European Parliament for 2024-2034 for approval.
BGMEA President Faruque Hassan said Bangladesh needs to increase its market share in the EU with the existing EBA facility, in order to maintain its competitiveness. In addition, the country is expected to sign PTAs and FTAs.
There are certain challenges Bangladesh needs to address through diplomacy in order to achieve GSP + or properly utilize trade preference, said Abdullah Hil Rakib.
For example, under the EBA, LDCs were authorized to benefit from preferential “rules of origin” (RoO) allowing a “single transformation” in the exportable production chain, he said. added.
But eligibility for preferences under the SPG + scheme requires a “double transformation”: cotton or lint into product.
“We have to persuade the EU to change the condition from double processing to single because Bangladesh still imports a large percentage of woven fabrics to make clothes,” said Abdullah Hil Rakib.
Trying to regain the American SPG
The US government suspended the facility after the 2013 Rana Plaza collapse incident that killed more than 1,100 people.
Faruque Hassan said they are discussing recovering the GSP facility in US markets.
The President of BGMEA said, “The United States allows 97% of articles under GSP. Sadly, Bangladeshi clothing items fall below the remaining 3%. what could have been $ 100 million now. “
However, he also mentioned that it would not be an easy task to grab the SPG facility in the US market as it requires their political decision. The US authorities have repeatedly postponed discussions on this issue due to their elections, added Faruque Hassan.
“Now we are asking them to give duty free access to clothing made from American cotton,” said the president of BGMEA.