The Multi-fibre Arrangement
(MFA), a tortuous quota system
that governed international
trade in textiles and clothing
for 30 years since 1974, expired
on January 1, 2005. The MFA
enabled developed nations,
mainly the USA, European Union (EU)
and Canada to restrict imports
from developing countries
through a system of quotas.
Bangladesh apparel industry was developed
primarily because of the MFA and
other trade agreements. Every
year countries agree quotas the
quantities of specified items
which can be traded between
them. The exporting country then
allocates licenses to firms to
export a certain proportion of
each quota. Bangladesh took
advantage of the quotas and
because of its competitive price
and quality; it could secure a
place in the world apparel
market.
Over the past 25 years, the
apparel industry has been
playing an extremely significant
role in Bangladesh's economy
especially in terms of share in
value addition, foreign exchange
earnings and employment
generation. It accounts for more
than 75 percent of the country's
export earnings while more than
10,000 apparel manufacturers
creates employment opportunity
for more than three million
workers, of which almost 80
percent are women. Bangladesh is
among the top five largest
garment exporters to the EU and
USA.
However, prior to the MFA phase-out, it was predicted
by many donors and
non-government agencies that
lifting of textile and clothing
quotas would be a labour and
trade disaster for developing
countries, including Bangladesh.
A number of countries also feared that a new wave
of cheap apparel products will
flood their markets and thus
threaten their domestic industry
while others hoped for new
export opportunities in the
quota-free trade environment. It
was also predicted that the
least developed countries like
Bangladesh will lose
preferential access to the US
and EU markets and thus face
higher competition for their
exports.
But, with the advent of the new quota-free world,
like other Asian countries the
readymade garment (RMG) industry
of Bangladesh has made a rapid
gain in apparel export.
In contrast, the European and
African countries and the USA
are losing out their market
after the MFA regime that ended
last year.
Moreover, increased competition from Asia is snatching
the market share of most Latin
American textile and clothing
makers.
Asian countries such as
Bangladesh and Pakistan, which
were projected as losers under
the quota free regime, have
shown an upward trend.
Bangladesh, one of the countries most often cited as a
potential loser, has managed to
be at an advantage, despite
strong Chinese competition.
After initially dropping by US$ 52 million in January
2005, export orders recovered
strongly in February -- upto US$
157 million -- and in some
sectors orders were up by as
much as 48 percent.
And Bangladesh exports continue
to see a positive growth in the
quota-free regime due to
substantial rise in income from
the knitwear sector.
However, the woven garment products continued to
show a negative trend during
January-September period. On the
other hand, knitwear products
maintained a strong growth
during the period.
The exporters hoped the trend in knitwear sector will
continue in the coming months as
it has a strong backward linkage
support. Besides, the knitwear
exporters went for an aggressive
campaign in some major markets
including the US to increase its
income from this sector.
During the first nine months of 2005 in the
quota-free regime, RMG export of
Bangladesh was around US$ 5077
million, according to Export
Promotion Bureau of Bangladesh.
Of the total RMG export during January-September 2005,
woven sector contributed around
US$ 2738 million while the
knitwear sector contributed
around US$ 2339 million.
Talking to Cotton Bangladesh, President of Bangladesh
Garment Manufacturers &
Exporters Association (BGMEA)
Tipu Munshi said it is true that
in the early months of
quota-free market, apparel
export of Bangladesh especially
woven export saw a downtrend.
"But, we can manage it very well. The volume of woven
export in the last couple of
months is increasing gradually
and in the coming months we are
hoping to manage a 20 percent
growth in woven export. On the
other hand, our knitwear export
in the quota-free era is
witnessing an upward trend every
month," he said.
He, however, said the apparel exporters of Bangladesh
are facing problems and that
non-compliant garment units are
not getting export orders.
BGMEA has set up a Compliance Cell in 2003 to help the
non-compliant garment units to
turn into compliant ones. So far
the cell supported around 200
garment units to be compliant.
However, the cell does not have enough financial
support to assist the small and
medium garment units to be
compliant. "Therefore, we urge
the government to allocate a
special fund for these small and
medium garment factories,"
Munshi said.
"We also need more backward linkages, minimum loan
interest rate, deep sea port
facility and re-opening of land
ports for yarn import to be more
competitive and cost effective,"
the BGMEA chief added.
President of Bangladesh Knitwear Manufacturers &
Exporters Association (BKMEA)
Fazlul Haque told Cotton
Bangladesh that Bangladesh is
doing better than expected and
forecasts by several
multinational agencies of a
labour and trade catastrophe
have not come true.
"In the first six months of the quota-free market, our
knitwear export experienced
around 116 percent growths and
in the last couple of months we
exceeded by 10 percent than our
target growth of export," he
said.
He said that although China is dominating the world
apparel market, a significant
portion of apparel buyers of
American and European countries
are shifting apparel purchases
from China to Bangladesh.
Especially in the past of couple of months, local
exporters have received a number
of orders from EU and American
buyers who earlier contacted
with Chinese exporters.
"American buyers are shifting their orders from China
to Bangladesh mainly due to
quota imposition on Chinese
products under WTO protection.
Similarly, some European buyers
are also shifting their orders
to Bangladesh as the EU market
imposed a limitation towards
Chinese products," Haque said.
“Although China has signed an agreement with the USA
recently to increase its export
volume to the USA year by year,
it will not affect the
Bangladesh export”, he said.
"We just need policy supports such as allowing yarn
import through land ports and
providing soft term loan for
factory expansion to the ensure
export growth," the BKMEA chief
 added.
M A Awal, chairman of Bangladesh Textile Mills
Association (BTMA), said as the
RMG exporters are offering a
competitive price and quality
goods, Bangladesh is currently
holding a secure position in the
quota free world.
"Bangladesh is the only Asian country which has made a
gain in the open market
economy," he said adding that
Bangladesh has the ability to
compete any country in textile
and clothing export.
"If our manufacturers and exporters get a proper policy
support, the Bangladesh textile
and clothing industry can make
progress for another ten years,"
the BTMA chief added.
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