Although attempts are being made to downplay the significance of the move by the US Trade Representative (USTR) to scrutinise various aspects of Bangladesh’s along with four other nations’ apparel industries, it should be taken seriously by policymakers in this country. According to a report carried in this newspaper: “Expected to be submitted to the USTR by August 30 this year, the report on findings will offer country-specific profiles of the apparel industries in the countries, including information on investment, vertical integration, duty-free access to the US market, wages and labour productivity and sourcing of inputs.”
A look at the US Department of Commerce’s Office of Textile Apparel (OTEXA) data on apparel exports to the United States (US) over the January- November 2023 period reveals that China leads the pack with US$15.21bn followed by Vietnam at $13.17bn and Bangladesh coming in third position with $6.79bn. Again, although the BGMEA president has downplayed any possible connection between this upcoming audit report and political statements made by US officials in the run up to the recently-concluded national elections, one wonders if that is the case. The memorandum signed by the US president back in November 16, 2023, placed great emphasis on advancing working empowerment, labour rights and high labour standards globally. Indeed, the Secretary of States had made specific reference to “sanctions, trade embargoes and visa restrictions” on individuals “who threaten, intimidate or attack labour-union leaders, labour-activists and labour organisations.” It could not get any more specific than this!
This does not augur well for the RMG industry. No matter what public statement is made by industry leaders, these labour issues have been priortised by the US and need to be recognised by the RMG sector and policymakers alike. The data speak for themselves. RMG exports are down across the board. With the exception of the UK market, sales of Bangadeshi RMG products fell in both the European Union (EU) and the US markets. Although exports are down marginally, it should be remembered that the US is an important export destination for Bangladeshi RMG as it represents about a third of total exports by the sector. Given the present situation, the UK market is going to become increasingly important to Bangladesh. The problem with the RMG industry in Bangladesh is that it is caught up in geopolitics and there is absolutely no reason to believe that the US is going to take a laid-back attitude on labour issues. A popular belief running around in the Bangladeshi business community is that since the country is the second-largest player in the global apparel sector, the country is untouchable.
Trade history, however, presents a contrary picture. Regardless of the strengths Bangladesh offers in terms of timely shipments and quality products, the fact remains that RMG exports are overwhelmingly dependent on the West’s goodwill towards the country. Should relations sour further on sticking points such as labour, Bangladesh may soon find itself out of favour. In that case, encountering trade barriers cannot be ruled out. Should Bangladesh be worried? Absolutely! Should the industry be gearing up to find new export destinations? The answer is, yes. Should Bangladesh be working overtime to conclude free trade agreements like the one being talked about with China? Most definitely. Time is of the essence and policymakers should make the best of it.
