Once the new rules of origin are enforced from January 01, 2011 Bangladeshi exporters, using the imported fabrics for producing readymade garments in Bangladesh and then exporting to EU market, are likely to be eligible for GSP benefits, a notification released by the EU Delegation to Bangladesh said.
Clothes made in Bangladesh will from January 1, 2011 have duty-free access to the EU market even if they’re made from imported textiles, the EU publication mentioned.
“This is a great opportunity for the apparel exporting industry; particularly the woven garments makers,” president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Abdus Salam Murshedy said.
Joining woven and knitwear garments, the country’s readymade garments (RMG) industry contributes over 90 per cent of the country’s total export earning.
One of the major changes in the new EU rule is likely to be permitted in case of several RMG units is that, they can go for single-stage processing or manufacturing readymade garments directly from fabric in place of the two-stage processing, where the manufacturing starts from the yarn stage and passes through the fabric stage to reach the ultimate product.
Subject to availability of some integral aspects related to the country’s garments industry, the new EU rules has widen a new door of opportunity, the BGMEA president said.
According to him, adequate supply of power, bank loan facility, smooth port operation to ensure minimum turn around timing and favorable law and order situation are the prime challenges ahead of the garment makers in taking the up-most advantage.
“If the government ensures availability of above elements, achieving US$20 billion RMG export within next three years would not be impossible,” Mr Murshedy added.
As per the new EU rules, most of the garment items, exported from LDCs, are likely to enjoy duty-free access to the European Union.
It is not going to take into consideration the place of origin of the raw materials. Usually, the duty imposed for readymade apparels is 12 per cent in the European Union, according to the press notification.
The generalized system of preferences is a trade agreement which permits low or zero duty on imports from developing nations.
The rules of origin determine whether the imported products are originally derived from the countries covered under GSP or not.
A large number of woven apparel exporters import the required fabric from China as the backward linkage sector is not as dominant as the knitwear sector.
The backward linkage sector within the country is expected to confront some competition as many producers of readymade garments import the fabrics from countries like China.
According to the state-run Export Promotion Bureau, woven garments exporters have earned US$ 2349.51 million during the July-Oct period of the FY 2010-11 which was 13.70 per cent above its strategic target for the period and 40 per cent growth against the corresponding period of FY 2009-10.
New rules announced on Wednesday by the EU will open up new opportunities for Bangladesh to expand its exports, a release of the EU said. The new rules, revising the rules of origin for products imported under the GSP were published on Wednesday in the EU’s official journal.
This regulation relaxed and simplified rules and procedures for developing countries wishing to access the EU’s preferential trade arrangements, while ensuring the necessary controls are in place to prevent fraud.
European Commissioner for Taxation, Customs, Anti-Fraud and Audit Alginlas Seme said, “By updating the EU’s rules of origin, we will help ensure that developing countries really benefit from the trade preferences on offer to them”.
“We want that the world’s poorest don’t lose out due to unnecessary complexities in our systems,” he said.
The new regulation will considerably simplify the rule of origin so that they are easier for exporters in developing countries such as Bangladesh to understand and to comply with, he added.
-The Independent, Thu, 25/11/2010
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