BGMEA, BKMEA take opposite stands on ROO

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Jasim Uddin Haroon
BGMEA and BKMEA, country's two leading exporting sectors, took opposite stands on the proposed new rules of origin (ROO) of the European Union (EU) in which the local value addition threshold will be lowered to 30 per cent.
Officials of the BKMEA (Bangladesh Knitwear Manufacturers and Exporters Association) claimed that the knitwear sector, having sufficient backward linkages, will be largely affected as the proposed ROO of EU will encourage import of fabrics.
But, BGMEA (Bangladesh Garment Manufacturers and Exporters Association) officials said the new ROO will create opportunities to boost the country's export to EU market.
They also said this will help enhance competitiveness in the global market.
The EU, last week, placed a new ROO for the least developed countries, which enjoys generalised system of preference (GSP). The new ROO will be effective from January 2010 after being approved by its member nations.
"We will be the worst victims of the proposed ROO. It will destroy our industry," said Md Fazlul Hoque, BKMEA president said.
He also said BKMEA, a group of over 1300 knit factories, will lobby against the new proposal as it will lead to the closure of many local factories.
"It has opportunities only and no challenges. We think it will help the growth of GSP utilisation in the EU market," said BGMEA president Anwar-Ul-Alam Chowdhury Parvez.
Knit's GSP utilisation in the EU is 88 per cent while woven have only 24 per cent.
Parvez also said: "Bangladesh should avail the proposed ROO as the country has little scope to develop backward linkage industries due mainly to power shortage and gas crisis."
Professor Mustafizur Rahman, executive director of the Centre for Policy Dialogue (CPD) told the FE that this will be disadvantageous for the industries which have backward linkages.
He said local industries need to enhance their efficiency in terms of lead time and compliances issues to be competitive in the proposed system.
He also said: "There is also opportunity for those type of industries which will dye, print, cut and manufacture clothing under the proposed system."
He also said it will create opportunities to utilise GSP in the EU market by the woven industries.
On the other hand, BTMA in a statement said this new ROO will help the industrial nations and Bangladesh's textile will suffer badly if it comes into effect.
"We feel any change in the existing GSP scheme will surely discourage use of local fabrics and yarn and thus pose a threat in an investment of around US$ 4.0 billion in primary textiles," said BTMA president Abdul Hai Sarker.
BTMA chief said local and foreign investors have invested in the primary textile in view of 2-stage transformation process in the existing GSP.
Zillul Hye Razi, a trade adviser of EU, told the FE that new ROO will take time to implement as all of its member nations will have to approve it.