The new set of Rules of Origin (RoO), enforced by the European Union (EU), has provided a fillip to Bangladesh's exports of readymade garments (RMG) to the EU markets. It has been purported to widening the market access facilities in favour of low income countries (LICs). Bangladesh has been able to take a positive advantage of the new RoO under which relaxed and simplified rules and procedures have been put in place in order to facilitate the LIC's access to the EU`s preferential trade arrangements.
Now that Bangladeshi apparel exporters are free to import fabrics from anywhere in the world, the condition relating to the use of locally produced fabrics for enjoying the duty-free access to EU market does not apply anymore. This has been the case since January 01 this year. And the favourable impact of this development is well illustrated by a marked surge of Bangladesh's RMG exports, particularly to the EU during the period between January and June this year.
Unfortunately, the benefits of the relaxed RoO have not been an unmixed blessing for Bangladesh. Its export-oriented RMG sector has so far been able to reap the best dividends out of it. It has been a boon to the RMG sector. But it is turning out to be a bane for local textile mills as their guaranteed market has slipped through their fingers. And at their expense, the countries exporting fabrics, namely, Pakistan, India, China, Thailand and Turkey, have turned out to be important beneficiaries of the changed RoO of the EU. However, not only readymade garment (RMG) items but also many more goods produced in developing and least developed countries are entitled to enjoy the benefits of the updated and relaxed RoO of the EU.
In the meanwhile, the local textile mills have expressed their deep anxiety over the quantum substantial jump in the import of fabrics by theapparel exporters during the last six months. This, according to the leaders of Bangladesh Textile Mills Association, is taking a heavy toll on them as their productivity is reported to have declined by 30 to 40 per cent during the period. The association leaders have claimed their Tk 300 billion worth of investment in textile sector is now threatened under such circumstances. If that is the case, it is certainly not a desirable development at all. It has all the potential of rendering thousands of people working in the domestic textile spinning and weaving mills jobless. Under the prevailing circumstances, the obvious question one might tend to ask: why are the Bangladesh RMG exporters switching over to imported fabrics ignoring locally-produced fabrics?
However, blaming the RMG exporters may not be the right thing to do for the new RoO-related problems facing the local textile millers. The RMG exporters are now leaning more on imported fabrics, mainly because of two factors --- cost and quality. The imported fabrics are cheaper in price and better in quality than locally produced ones. Theapparel exporters are also required to stay competitive in the global market. The updated and relaxed EU RoO has not come all on a sudden. For quite sometime, it was known that the new rule would replace the old one. The BTMA made representations to the government to take up their problem with the EU.
Evidently, the local textile mills have some inherent weaknesses, including the country's dependence on imported raw cotton. Obviously, the countries producing fabrics with their home-grown cotton do enjoy an edge over non-cotton growing fabric producing counterparts. Though the local textile mills have the capacity to meet 80 per cent of the demand of theapparel exporters, they are not as cost-effective as they have to compete with foreign sources of fabrics. In this situation, some positive steps do need to be taken to make the local textile mills competitive. Against this backdrop, the government might sympathetically consider the request from the millers for hiking the current rate of subsidy to the local textile millers.
http://www.thefinancialexpress-bd.com/more.php?news_id=142816&date=2011-07-15
Now that Bangladeshi apparel exporters are free to import fabrics from anywhere in the world, the condition relating to the use of locally produced fabrics for enjoying the duty-free access to EU market does not apply anymore. This has been the case since January 01 this year. And the favourable impact of this development is well illustrated by a marked surge of Bangladesh's RMG exports, particularly to the EU during the period between January and June this year.
Unfortunately, the benefits of the relaxed RoO have not been an unmixed blessing for Bangladesh. Its export-oriented RMG sector has so far been able to reap the best dividends out of it. It has been a boon to the RMG sector. But it is turning out to be a bane for local textile mills as their guaranteed market has slipped through their fingers. And at their expense, the countries exporting fabrics, namely, Pakistan, India, China, Thailand and Turkey, have turned out to be important beneficiaries of the changed RoO of the EU. However, not only readymade garment (RMG) items but also many more goods produced in developing and least developed countries are entitled to enjoy the benefits of the updated and relaxed RoO of the EU.
In the meanwhile, the local textile mills have expressed their deep anxiety over the quantum substantial jump in the import of fabrics by theapparel exporters during the last six months. This, according to the leaders of Bangladesh Textile Mills Association, is taking a heavy toll on them as their productivity is reported to have declined by 30 to 40 per cent during the period. The association leaders have claimed their Tk 300 billion worth of investment in textile sector is now threatened under such circumstances. If that is the case, it is certainly not a desirable development at all. It has all the potential of rendering thousands of people working in the domestic textile spinning and weaving mills jobless. Under the prevailing circumstances, the obvious question one might tend to ask: why are the Bangladesh RMG exporters switching over to imported fabrics ignoring locally-produced fabrics?
However, blaming the RMG exporters may not be the right thing to do for the new RoO-related problems facing the local textile millers. The RMG exporters are now leaning more on imported fabrics, mainly because of two factors --- cost and quality. The imported fabrics are cheaper in price and better in quality than locally produced ones. Theapparel exporters are also required to stay competitive in the global market. The updated and relaxed EU RoO has not come all on a sudden. For quite sometime, it was known that the new rule would replace the old one. The BTMA made representations to the government to take up their problem with the EU.
Evidently, the local textile mills have some inherent weaknesses, including the country's dependence on imported raw cotton. Obviously, the countries producing fabrics with their home-grown cotton do enjoy an edge over non-cotton growing fabric producing counterparts. Though the local textile mills have the capacity to meet 80 per cent of the demand of theapparel exporters, they are not as cost-effective as they have to compete with foreign sources of fabrics. In this situation, some positive steps do need to be taken to make the local textile mills competitive. Against this backdrop, the government might sympathetically consider the request from the millers for hiking the current rate of subsidy to the local textile millers.
http://www.thefinancialexpress-bd.com/more.php?news_id=142816&date=2011-07-15
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