RMG exports to US revive

Published in The Daily Star on June 12, 2018

Garment exports to the US grew 2.90 percent year-on-year to $1.87 billion in the first four months of the year as Bangladeshi manufacturers benefit from the Trump administration’s abandonment of the Trans-Pacific Partnership.

The TPP was a sweeping trade pact between the US and 11 other countries — Australia, Japan, New Zealand, Canada, Mexico, Singapore, Malaysia, Vietnam, Brunei, Chile and Peru — representing about 40 percent of the world economy.

Before the US formally pulled out from the TPP in January last year, many American retailers were placing billions of dollars worth of work orders in Vietnam — a major competitor of Bangladesh in global apparel trade — hoping to enjoy zero-duty benefit under the mega trade deal.

Now, American retailers are slowly coming back to Bangladesh, said Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). “I hope Bangladesh will continue to receive those work orders.”

In the January-April period of 2018, Bangladesh was the sixth largest garment exporter to the US, according to data from the US Office of Textiles and Apparel.

The US is the single largest export destination for Bangladeshi exports, with 90 percent being garment items.

Another reason for the retailers’ fresh patronage of Bangladesh’s garment factories is the near-completion of remediation works by the Accord and Alliance, the foreign inspection agencies formed in the aftermath of the Rana Plaza collapse in 2013 to tangibly enhance workplace safety in the country’s apparel factories.

“So, our image has brightened up a lot,” Rahman said, adding that the depreciation of taka against the greenback was another factor going in favour of the garment exporters. The garment makers now get Tk 84 for every US dollar, which was Tk 80 even a year earlier.

The rising export of value-added garment items was also another reason for the higher receipts in the first four months of 2018.

Last but not the least, American retail sales has started picking up from December last year, which also fuelled the increased work orders, Rahman added.

The failure of the other emerging garment-exporting nations like Cambodia and Ethiopia — apart from Vietnam — to successfully cater to the American retailers has sent the work orders flowing into Bangladesh again, said Kutubuddin Ahmed, chairman of Envoy Group, which exports nearly $150 million worth of garment items to the US in a year. This time, the local garment makers have been enjoying the benefit of shorter lead time as the sector’s backward linkage integration has adequately been established, he said.

“This factor has also been helping Bangladesh to achieve higher exports, a benefit that the other emerging countries do not have.”

As a result, the 15.62 percent duty that apparel exports from Bangladesh are subjected to upon entry to the US is not working against Bangladesh’s favour, he said.

As of April, China sent $10.92 billion worth of garment items to the US, which is the highest. It was followed by India ($2.67 billion), Vietnam ($3.99 billion) and Pakistan ($928 million).