One of Bangladesh’s biggest competitors, Vietnam, has already entered into a Trans-Pacific Partnership (TPP) agreement (at Auckland on February 2016) with some other countries including the US. According to economists, that’s why our country most likely stands to suffer from the effects of the US-led TPP trade deal, especially in terms of export earnings, such as from RMG. The matter of concern at hand is that Vietnam is the only garment-producing country that has been included in the TPP. With the implementation of TPP, Vietnam will become a more attractive source for imported apparels, if and when it gets duty-free access to the US. The RMG sector’s capacity to take a bigger share of the US market is hindered by the high tariff rates levied on Bangladeshi apparels. Surprisingly, Vietnam’s apparel export to the US increased by a massive 244% during the period between 2005 and 2014, unmatched by any other substantial exporter, whereas apparel export from Bangladesh to the US increased by 108% during this period. Moreover, Vietnam is leagues ahead of Bangladesh in terms of investment, compliance, and environment affairs. Bangladesh may meet challenges in the short run, but in the long run the deal will affect it adversely, according to the former vice-president of BKMEA, Mohammad Hatem. Meanwhile, many economists are thinking that, not only RMG but non-RMG exports from Bangladesh will also be affected by the TPP deal. Another misfortune for the RMG sector was the US government’s extention of the general system of preferences (GSP) for 122 countries — the only caveat being (you guessed it) Bangladesh being left out of the list. The US government have said that there was “no improvement” in working conditions, workers’ rights, and social compliance in the RMG sector, even though social compliance had already been established after the Rana Plaza building collapse at Savar, Dhaka in 2013. Mohammad Hatem suggested that the external factors are also at play, such as getting lower prices from buyers of major RMG-importing countries even after meeting social compliance standards. During the period between January-July 2015, the price of RMG products imported by the US fell by 2.45% and the price of RMG products imported by the EU fell by 1.41%, in spite of the fact that every factory had to spend Tk5 crore to Tk20cr to upgrade infrastructural, fire safety, and electrical safety facilities to meet international standards. Such a large investment would be rather risky if these internal and external issues are not sorted out as soon as possible. Doing business and earning foreign revenue through export is becoming harder for Bangladeshi RMG entrepreneurs, not only due to disruptive internal factors that are more than enough to render the trade uncompetitive. For example, the recent price hike of gas by 15% for industrial units and 100% for captive power producers. Apparel manufacturers and exporters have also urged the government to maintain a smooth gas supply to their production plants in order for them to have a greater global market share. Finally, the Bangladesh government must work on the nation’s RMG brand image to enter the US market with duty benefits, just like Vietnam. We must move away from solely being suppliers to branded retailers, and focus on establishing our fashion industry as a brand in itself. In addition, Bangladesh should consider following the Chinese strategy of enhancing productivity and manufacturing high value-added products to increase its market share in the US and other markets.
