EU loose-text rules of origin fabric manufacturers in Bangladesh feel pressure

Business Club April 12 Experts suggest that local fabric manufacturers in Bangladesh should increase production efficiency and improve product quality in order to offset the adverse effects of the EU's relaxation of rules of origin on the local textile sector.

From January 1, the EU began to relax rules of origin for the Least Developed Countries (LDCs), including Bangladesh, which will affect the local textile industry in Bangladesh.

In the first three months of this year, Bangladesh’s garments exports to the European Union increased significantly, but local fabric sales, especially non-woven fabrics, were affected by the UK’s relaxation of the rules of origin.

Garment manufacturers import fabrics from Other countries, such as China, where the cost of imported fabrics is lower than that of domestic fabrics.

MA Taslim, a trade analyst, said that following the EU’s relaxation of the GSP rules of origin, the opportunities for local production and the sale of fabrics to apparel manufacturers have increased significantly.

However, many apparel manufacturers do not buy local fabrics, but instead import lower-priced fabrics from other countries. Therefore, the sales of local fabrics do not see any improvement.

The previous rules of origin provided protective covers for the local textile industry for decades, because apparel manufacturers must purchase fabrics from Bangladeshi textile factories in order to obtain zero tariff EU market access.

Taslim said that garment manufacturers purchase local fabrics and their product prices are competitive.

If domestic investors cannot provide fabrics at competitive prices, foreign competitors like Arvind will squeeze in. Arvind is the largest denim company in India. As this company may realize that Bangladesh is a market, they are entering Bangladesh.