Textile sector sees proposed changes in RoO by EU as major challenge

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FE Report
Local textile entrepreneurs see the EU's move to revise the existing rules of origin (RoO) facilities as a challenge for them to stay competitive in the global market of textile and clothing.
An official in the European Commission (EC) however said it is still a proposal which will come into force only after approval by the member countries.
The EC is mulling amendment to the present RoO to boost trade with all least developed countries. The new RoO is likely to have 30 per cent value addition criterion. Currently, the Bangladesh textile sector is enjoying two-stage RoO, which adds upto around 80 per cent value to the local textile sector. The new RoO might be implemented in January 2009 if it is approved.
Compliance with core labour and social issues, including environment pollution reduction, are other future challenges for the country's textile sector. The EU-ASEAN FTA and the proposed EU India Free Trade Agreement (FTA) and successful conclusion of WTO's discussion on NAMA (Non-Agriculture Market Access), are other issues which could significantly affect Bangladesh's textile exports, said the EU official.
The challenges are there at a time when the Primary Textile Sector (PTS) has turned into the basic industry in the overall chain of textile processing of the country. The sector made remarkable growth since the mid-nineties. Bangladesh Textile Mills Association (BTMA) said appropriate support from PTS resulted in the cost effectiveness, competitiveness and reduction in lead time for the apparel exporters.
The PTS comprising spinning, weaving, knit and knit-dyeing so far attracted around Tk. 350 billion in investment and created direct job opportunities for around five million people.
The growth in the export of apparels with the phasing out of MFA has led to the setting up of 310 Spinning mills, of which, 290 mills are in the private sector. Since 2001 there has been a boost in investment. The private sector spinning mills can now meet around 100 percent demand of yarn at the domestic level as well as 85 per cent of the demand for yarn for export oriented knit fabrics mills. In addition to that 35 to 40 per cent demand for yarn of export-oriented fabric producing mills are being met by the private sector spinning mills.
"The interdependence between the PTS and the RMG has spawned a new set of linkage industries and facilitated expansion of many service sectors activities," said BTMA President Abdul Hye Sarkar. The sectoral input-output ratio of yarn & RMG at present is 0.59 and 0.004 per cent.
Supporting his stand, the EU official said Bangladesh, at present are getting GSP facilities at 90 to 98 per cent in case of knit-exports in the European market.
Compared to Spinning sector, investment in weaving sector however is much lower. Various factors are contributing to poor investment. High cost of capital, and lack of expertise deter the growth pattern of the weaving sector. Nearly 400 SMEs and around 1000 specialised textile & power loom units are producing grey fabrics. According to a projection of the Ministry of Textiles & Jute, during 2006-07 the total demand for fabric was 8.48 billion metres, out of which domestic demand was 2.46 billion & demand from the export oriented units was 6.02 billion metres.