The pandemic has impacted almost all industrial sectors, however, it has particularly affected the textile and clothing sector in Asian countries graduating from the least developed countries (LDC). To overcome its effects, LDCs need to adopt certain measures that would help bolster the industry’s future prospects, says a recently published joint ITC-WTO-UN report.
Tariffs and restrictive rules may impact LDCs’ exports
Focusing on Bangladesh, Lao People’s Democratic Republic, and Nepal, the report highlights the support measures offered by international development and trade partners to boost the sector’s growth in LDCs. These countries need to adjust to the new measures to ensure their smooth graduation from the category, adds the report. In all, Asian LDC export around 8 percent of the world’s total textile and clothing products. The sector is the primary source of income for these countries, especially for women. Graduation from the LDC category offers them an opportunity to upgrade their position in the global textile and clothing value chain.
Most textile and clothing manufacturers in these countries expect graduation to impact exports, notes the study. They believe higher tariffs and more restrictive Rules of Origin may affect their performance. To offset these effects, many of these countries are focusing on addressing the impact of the pandemic. LDC graduation may also affect sourcing patterns of major clothing brands and retailers looking to expand over the next three to five years, says the report.
Boosting industry competitiveness in LDCs
For this report, ITC surveyed 20 and 40 textile and clothing manufacturers in each LDC. Produced by the World Trade Organization (WTO), the UN Department of Economic and Social Affairs (DESA), the International Trade Centre (ITC), and the UN Conference on Trade and Development (UNCTAD), the study brings together different areas of expertise on LDC graduation and T&C sector. It also studies the effects of graduation on around 30 leading international fashion companies between May and August 2021.
Results indicate, most buyers are consolidating their sourcing portfolio and seeking to source from larger, multinational apparel manufacturers. This threatens the prospects for many apparel-producing small businesses in LDCs, says Pamela Coke-Hamilton, Executive Director, International Trade Centre. Along with trade partners, ITC hopes to overcome this challenge by boosting the industry’s competitiveness in these LDCs.
