GENEVA — Bangladesh’s heavy dependence on textiles and apparel continues to increase, with the category reaching a record 89.6 percent share of total merchandise exports of $36.7 billion in 2017-2018, up from 87.9 percent, or $24.2 billion, five years earlier, a World Trade Organization report said.
WTO trade partners urged Bangladesh to diversify its export mix and to take additional measures to improve labor and safety standards in the country’s apparel and other sectors.
Progress on worker safety and workers’ rights issues “will remain critical to enhancing productive trade relationships globally,” David Bisbee, a member of the U.S. mission to the WTO, told delegates during a two-day review of Bangladesh’s trade policies that ended Friday.
Similarly, Marc Vanheukelen, the European Union’s WTO ambassador, pointed out that in 2013 Brussels took the initiative of launching a Sustainability Compact which aims to foster improvements in labor rights and factory safety in the garment industry in Bangladesh. Together with Bangladesh, the work is pursued by the EU, Canada, the U.S. and the International Labor Organization with a view to address areas of remaining serious shortcomings, such as freedom of association and occupational safety and health.
Bisbee also said two-way trade “totaled approximately $8.2 billion in 2018” — noting that currently, “Bangladesh enjoys a considerable surplus in our two-way trade — over $3.9 billion annually. This is largely due to apparel exports, for which we are Bangladesh’s largest single country buyer.”
The WTO report noted that Bangladesh “is on course to graduate from least-developed country (LDC) status in 2024.”
Being an LDC allows Bangladesh “benefits from duty-free and quota-free access to the EU market under our ‘Everything But Arms’ (EBA) preferential arrangement,” said Vanheukelen.
In 2017-2018, the EU was the top destination for Bangladesh’s merchandise exports with a 58.2 percent share, followed by the U.S. with 16.3 percent.
However, the WTO report showed Bangladesh is still providing major incentives to firms in the apparel sector.
“Bangladesh continued to maintain a policy framework for investment in RMG,” or ready-made garment industry, the WTO report said, and noted that in 2018-19 “the corporate income tax rate of manufacturers and exporters of RMGs was reduced to 15 percent, and 12.5 percent for a public company. Furthermore, any garment factory that obtained a green building certification would benefit from a lower tax rate of 12 percent.
“The RMG industry also benefits from concessional interest rates and subsidies on the costs of utilities,” it said.
The report highlighted that low wages “continue to assist the expansion of manufacturing activities led by small and medium-size enterprises in the labor-intensive textile and RMG areas, which employ an estimated 5 million people.”
Finally, the report said, that RMG-related investments in export-processing zones as of August 2018 stood at $1.7 billion for garments, and $630.7 million for garment accessories.