The European Union (EU), a union of 27 countries, is the primary market for Bangladesh’s ready-made clothing. Exports to the EU account for more than half of total export revenue. Bangladesh’s garment exports to the European Union have surpassed all other competing nations in terms of export growth during the first two months of the current calendar year, or January and February. In comparison to the same period last year, Bangladesh’s exports grew by 37% during this time. Vietnam saw a 17 percent increase in exports, China a 25 percent increase, and India a 26 percent increase.
It is uncertain if Bangladesh will be able to sustain its comfortable export flow in the future. According to a number of exporters and trade analysts, US President Donald Trump recently increased duties on goods imported from China and Vietnam. The two nations’ ability to export goods to the US market will consequently be hampered. Specifically, exports from China might halt. As a result, Chinese goods will have to exert pressure in other markets.
This worry has been voiced by economists, trade specialists, and exporters in a number of
conversations since the US president placed extra tariffs on 65 nations, including Bangladesh, on April 2. The total tax burden on Bangladeshi goods will be 52% if the recent announcement is implemented. Products from Vietnam at 61%. Chinese goods will be subject to a 145% levy. However, since April 9, new duties on goods from Vietnam, Bangladesh, and every other nation—aside from China—have been deferred for ninety days.
Among the top 10 exporting nations in the EU market, Bangladesh comes in at number two. As usual, China is at the top of the list. Vietnam does not rank among the top five exporters to the EU market, in contrast to the US or other markets. Here, the nation is ranked sixth. There, Turkey ranks third in terms of exports. Fourth and fifth place go to India and Cambodia, respectively. In the ranking of the top ten nations, Sri Lanka comes in at number nine, Morocco at number eight, and Pakistan at number seven. In tenth place is Indonesia.
The EU’s official statistics agency, Eurostat, recently released a study stating that China exported $4.55 billion worth of clothing to the EU between January and February. Bangladesh made just over $3.69 billion in exports. Turkey made $1.61 billion in exports. India’s came to just around $870 million. Vietnam exported $760 million, whereas Cambodia exported $780 million. A total of $16.1 billion worth of clothing was imported by EU nations during that time.
There are numerous explanations for this upward trend in exports to the EU, Mohiuddin Rubel, the former director of the BGMEA, a group of ready-made clothing producers and exporters, told the media. Following the region’s economic recovery, demand has grown. Additionally, there has been a minor increase in the quantity of value-added items exported by Bangladesh. Improvements in security have raised brand-buyers’ trust in Bangladesh. There are currently a considerable number of export orders.
In November of next year, Bangladesh will finally leave the LDC category. Additionally, duty-free privileges will be offered for the upcoming three years. This facility won’t be accessible after this. On the kinds of goods that Bangladesh exports, a charge of 9% will be applied on average.
However, in 2027, the EU’s Free Trade Agreement (FTA) with rival Vietnam will come into full force. In other words, Bangladesh will have a totally different relationship with Vietnam than it does now. Bangladesh is expected to lose 14.3 percent of its export revenue from the EU and other markets combined, according to the World Trade Organization (WTO). In 2020, the EU-Vietnam free trade agreement will go into effect in part. As of right now, 71% of Vietnamese goods are eligible for duty-free exports. Ready-made clothing is are not on this list. An average of 9.6 percent duty is imposed on clothing products.
