Apparel-makers anticipate hard competition in their largest export destination, Europe, as the EU and Vietnam have now struck a deal on free trade. The trade deal between the European Union (EU) and Vietnam, signed a couple of days back, came close on the heels of the US-led Trans-Pacific Partnership agreement that also groups the Southeast Asian Nation. The industry leaders said their advantage with GSP (generalised system of preferences) in the zone will erode fast following the deal that will be effective from early next year. Terming Vietnam number-one rival on the global market, the local players said Bangladesh now needs to enrich its image to combat the crisis likely to be stemming from the pact in the near future.EU-Vietnam free trade pact may deal a blow to BD The FTA deal may remove nearly all tariffs between Europe and one of world’s surviving communist states. Apart from apparel shipment, many a leading export product of Bangladesh, like leather goods, frozen fish and so, will also face stiff competition, people familiar with the developments said. Vietnam’s main exports to the EU market include electronic products, footwear, textiles and clothing, coffee, rice, seafood and furniture. And their competitive edge will be up following the deal. The agreement followed two and a half years of intense negotiations between the 28-nation European Union and Vietnam, whose two-way trade has grown threefold to 28 billion euros (about $30bn) in the last 10 years. Last August, the EU and Vietnam reached an agreement in principle and only had a few legal hurdles to overcome to finalise the accord. They inked the deal Wednesday. This happens to be the maiden agreement the EU has concluded with a developing country, and it will remove more than 99 per cent of tariffs on goods traded between the two economies over a period of up to seven years. Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), takes it as a bad news for the main export industry of Bangladesh that enjoys the largest combined market in the EU realm. “This is definitely a bad news for us,” the trade leader said. Mr Rahman rued: “We remained idle. We should also try to make partnership with our big importers.” He said someday Vietnam’s tariffs to the EU will come to zero. “It is clear that every year we will face problem there.” In 2014, the EU-Vietnam trade in goods was worth over €28.3 billion, with €22.1 billion in imports from Vietnam into the EU and €6.2 billion in exports from the EU to Vietnam. The EU is one of the largest foreign investors in Vietnam. In 2015, EU investors committed a total of $1.3 billion in Foreign Direct Investment and thus became Vietnam’s third-largest foreign investor-partner. On the other hand, Bangladesh’s export to the EU amounted to $16.4 billion in 2013-14. Anwar-Ul-Alam Chowdhury, a former BGMEA president, said: “As Vietnam is one of the key competitors in the global market, so her easy entry into the EU may create a big trouble for Bangladesh.” But he raised question about Vietnam’s capacity to cash in on the easy market access. Vietnam is also a member of the newly launched TPP (Trans Pacific Partnership) led by the United Sates which will also facilitate the country in boosting its exports. Mr Chowdhury, managing director at Evince Garments, said Bangladesh should now build its image which, according to him, is ‘very bad’ in recent times. But, another leading exporter, Salam Murshedy, said Vietnam has the capacity to cope with growing demand. “I think this agreement will raise their competitiveness; we will lose ground in the EU.” The global apparel market is believed to be $480 billion, with China being market leader. The annual growth is around 8.0 per cent.
