Apparel export to EU awaits severe competition: experts

Bangladesh will face severe competition in garment shipment to the European Union (EU) once it makes the United Nations status graduation from a least developed to a developing nation, a noted economist said yesterday.

Bangladesh will lose a 12 per cent duty benefit while Vietnam will enjoy zero duty benefit for signing a free trade agreement (FTA), said Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue (CPD).

So Bangladesh will face a disadvantage of nearly 22 per cent to 23 per cent in duty to the EU, he said.

Vietnam will also enjoy duty benefits to major markets like Canada, the US and Australia since it is a member of a Trans-Pacific Partnership (TPP) Agreement and for having signed a Regional Comprehensive Economic Partnership (RCEP) agreement, Rahman said.

So there is scope for limitations to come about for Bangladesh's garment sector in the next seven to eight years if the government does not take up necessary action plans to expand the business horizon, he said.

It is the state's responsibility to get FTAs, preferential trade agreements (PTAs) or comprehensive economic partnership agreements (CEPA) signed with countries concerned, bring massive reforms and protect labour rights for enjoying duty benefits, he said.

Otherwise, the bad impacts of business end up befalling workers, Rahman told a virtual discussion on "Dealing with the aftermath of Covid-19 Adjustments and Adaptation Efforts of the Apparel Workers in Bangladesh" organised by Nagorik Platform and Christian Aid.

Garment manufacturers, exporters, union leaders, researchers and experts participated in the discussion moderated by Debapriya Bhattacharya, a distinguished fellow of the CPD and convenor of the Citizen's Platform for SDGs, Bangladesh.

Rehman Sobhan, chairman of the CPD, said it was either miscommunication or something else, but the sudden reopening announcement after the latest lockdown prompted a large number of workers to rush to their workplaces.

They did so despite the risks posed to their lives as they thought they may lose their jobs or face other problems, he said.

Workers felt highly insecure in the relationship deriving from the markets alongside in social relationships, he said.

The whole concept of collective bargaining originating from a single union in fact creates an equivalent labour presence which will bargain with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), he said.

A countervailing power is an essential element in terms of addressing the imperfect balance of power between labourers and employers, Sobhan said, adding that this problem unfortunately was not addressed.

With the labour movement being fractured with many little players coming on board, it is not really an equal relation when employers are not just economically powerful but now a major political presence in parliament, he said.

So it needs to be known what the industry's view was, whether they were supportive, what the government's position was, and whether they were going to come together and attempt to work on collective bargaining to organise the labour movement, he said.

Here is a big deficiency in the labour movement itself and none of the labour people did challenge it year after year for which it could not be said whether it really made any progress, he added.

Although a lot of structural transformation took place in the industry, no one has taken up the price issue for conversation, he said.

For instance, a $5 shirt from the suppliers in the country is sold at $25 in the retail market. "Why it is not brought into conversation and why the BGMEA did not take this issue to the buyers?" he asked.

"A major structural change is needed but who will lead this?" he questioned. The state has a role to play so that more investment comes into high value added garment items, he added.

He suggested that the research community design a model for a universal insurance for the sector which covers health insurance, unemployment insurance and also addresses problems of provident funds.

"Why do not they partner with Brac, why they do not partner with the BGMEA and other players to put this together to bring the government to see how it is going to be operationalised?" he asked.

The industry people should play an entrepreneurial role and the state should lead here, he said. Otherwise, it will remain only in conversation and will not turn into action, he said.

Rubana Huq, the immediate past BGMEA president, said the price of garments being sent to the EU declined by 2.43 per cent while the export volume fell in the time of Covid-19.

Bangladesh may lose $12 billion-worth of business to Vietnam once its trade benefits cease and Vietnam begins enjoying the tariff benefits to the EU, she said, adding, "Time has come to be nervous".

A Matin Chowdhury, managing director of Malek Spinning Mills and former president of Bangladesh Textile Mills Association (BTMA), said the LDC graduation would be challenging but there were some opportunities there too.

Taslima Akter, president of Bangladesh Garment Workers Solidarity, sought an emergency fund for garment workers and review of wage structures as prices of basic commodities had gone up in the markets.

Babul Akter, president of the Bangladesh Garment and Industrial Workers Federation, said they were happy with the new international accord as they had been demanding for it earlier.

MA Razzaque, chairman of the Research and Policy Integration for Development, said a good number of female workers in the garment sector might lose their jobs when Bangladesh loses its preferential market access to the EU.

In Vietnam, some 47 workers can produce $1 million worth of garment items whereas in Bangladesh 140 and 142 workers are needed for the same. So the production cost is high in Bangladesh but the price is almost the same as those from Vietnam, he added.

Presenting a study, Towfiqul Islam Khan, senior research fellow at the CPD, said during the Covid-19's first wave, many workers did not get their salary and allowances.

But in the second wave some 98 per cent of workers received those, which indicates that the second wave was addressed better than the first, he said.