The readymade garments (RMG) sector of Bangladesh, after three decades-long journey, now accounts for about 80 per cent of the country's total export earnings. The sector directly employs 4.4 million people and another 4.0 million are employed in backward and forward linkage industries. Through large-scale employment generation, it has helped alleviate poverty in the country to a great extent, brought about a dynamic change in the society and positioned Bangladesh as the second largest apparel-exporter country in the world.
The loss of GSP (Generalised System of Preferences) for export of non-RMG products to the United States due to disasters in garment factories is a great setback for Bangladesh's exports. In June 2013, the US suspended Bangladesh's trade benefits under the GSP programme that made Bangladeshi (barring RMG) products ineligible for duty-free treatment. In 2012, total value of the US imports from Bangladesh under GSP was $34.7 million with main imports being tobacco, sports equipment, porcelain china and plastic products. The US legal authorisation for duty-free treatment for all countries under GSP expired on July 31, 2013. Since the Obama administration endorsed the Congressional action to resume the GSP programme at the earliest opportunity, a review was conducted by the GSP Sub-committee of the Interagency Trade Policy Staff Committee chaired by the USTR. The committee has in its fold representatives from the Departments of State, Labour, Commerce, Agriculture, and the Treasury, as well as the US Agency for International Development to assess the ground reality. A USTR-led interagency review concluded that while Bangladesh has made noticeable progress over the last year in respect of fire and building safety issues in the RMG sector, further progress in addressing workers' rights issues is required to be made before reinstatement of GSP can be considered.
US Trade Representative Michael Froman said, "There is more to be done, building on the collaboration among the government of Bangladesh, private sector stakeholders, and the International Labour Organisation, in order to address the concerns about factory safety in the apparel sector. We also urge the government to accelerate its efforts to ensure workers' rights and to take measures to address continuing reports of harassment of and violence against labour activists who are attempting to exercise their rights."
Now, what should be the ultimate responsibility of Bangladesh with regard to accelerating its export growth steadily? The entrepreneurs should mobilise their efforts to find an alternative instead of waiting to regain GSP facilities. If Bangladesh really wants to come out of this sensitive issue, it will have to concentrate on exploring alternative export markets.
At present, the European Union (EU) is Bangladesh's single largest export market, apart from the US and Canada. In fiscal 2013-14, the country's exports to the EU reached a record height of more than $16.4 billion which accounted for more than 54 per cent of Bangladesh's total exports at that time. The duty-free market access in the EU under the GSP has been a tremendous opportunity for Bangladesh and earned for the country a whopping amount of foreign currencies. We need not worry much about losing US GSP if we can explore new markets and diversify our exports.
Future export growth will depend primarily on exploration of new markets and increasing market share in the existing ones, alongside diversification of products. Further growth of the garments sector is possible through exploiting the existing market to its full potential and capturing new markets, while product diversification will take some time. Newer products will emerge more slowly. Thus, rapid export growth will initially depend on capturing higher market shares in basic garments, our main strength-both in existing markets as well as potential ones like Japan, China, India and the ASEAN countries.
Though Bangladesh is the second largest apparel exporter in the world, the lion's share of our total garment exports is concentrated on only two markets - the EU and the US with apparels making a headway in the latter after paying high duties. There is thus a critical need to expand our markets beyond these countries. One important reason for us to look for non-traditional markets, however, relates to the fact that our manufacturers get orders for eight months in a year from the existing markets and have to remain idle for the remainder of the year.
If the country's apparel exporters can explore new markets in Latin America and South Africa, there will be export orders throughout the year, as when it is winter in the US, it is summer in the southern hemisphere and Latin America. In addition, the exporters will feel comfortable with alternative markets because the new importers will not impose tough conditions like those of the traditional markets at the initial stage. So, we need to explore and exploit the non-traditional markets as market diversification will not only help Bangladeshi manufacturers reduce dependency on the selected markets, but will also increase their bargaining power in setting product prices.
Countries like China, India, Australia, South Korea, South Africa and Russia can be attractive export destinations provided we can properly study their procurement patterns, consumer markets, lifestyles and other relevant economic indicators.
In addition, Bangladesh should start working on value addition with fabric designs which takes away a substantial portion of its competitive advantage. Institutions on collection of fashion apparels and fabrics from various sources should be set up to participate in setting fashion trends across the world. This can easily enhance returns by 5-10 per cent in the immediate future.
If properly implemented, these strategies will definitely assist us in sustaining our export growth and making global buyers more interested in our products. Thus we can further raise our share in the global market and move steadily ahead to establish 'Made-in-Bangladesh' brand image.
The writer, Assistant Secretary of BKMEA, is currently working at the Institute of Apparel Research and Technology (IART), Bangladesh.
rajonbkmea@gmail.com
© 2026 - All Rights with The Financial Express
