BGMEA expects to obtain GSP Plus facilities in EU

Bangladesh Garment Manufacturers and Exporters Association is expecting to obtain GSP Plus facilities in the European Union market after the country’s graduation from the Least Developed Countries.

"Obtaining GSP Plus status in the EU market will not be difficult if the EU finally adopts the proposed rules without the threshold criteria,” said BGMEA President Faruque Hassan.

They are optimistic about getting it soon, he said in a press conference on the outcome of his recent visit to the United States and Canada on Saturday.

The EU has proposed for withdrawal of stringent 7.4 per cent import threshold in the proposed GSP programme.

The BGMEA President, however, said obtaining GSP facilities in the US market will not be so easy even after fulfilling all the conditions as political issues are related here.

He said the EU is the main market of Bangladesh's apparel items as 60 per cent of clothing items go there.  But, following Bangladesh's graduation from LDCs there may be some changes in the market in terms of duty, he said.

The EU is going to adopt the new GSP scheme for the LDCs and developing countries, for 10 more years between 2024-34 with amendments to the existing rules and regulations by 2023.

The 7.4 per cent threshold is measured for any country under the EU’s import level from any LDC and developing country under its flagship everything but arms (EBA) programme.

The higher threshold for Bangladesh was a major barrier in obtaining the GSP Plus after the LDC graduation. 

Currently, some 58 per cent of the total exports and 64 per cent of garment items in particular of the country are destined to the EU.

Bangladesh will be finally graduated as a developing country in 2026 as the country has already fulfilled all three criteria of the United Nations Committee for Development Policy (UNCDP) for the graduation.

The BGMEA president said the UN may also allow continuation of duty benefit to the LDCs for 12 years more as the LDCs including Bangladesh have been lobbying with different countries and international communities for extension of the transition period for 12 years.

He said Bangladesh is well ahead of fulfilling the conditions of 32 international conventions for obtaining the GSP Plus to the EU markets.

Currently, Bangladesh has the highest number of Leadership in Energy and Environmental Design (LEED) green factory buildings certified by the United States Green Building Council (USGBC).

Of the top 10 LEED certified garment buildings, nine are in Bangladesh while of the top 100 such buildings 40 are in the country and 500 more local garment factories are waiting to be certified by the USGBC soon.

Of the total 148 LEED certified garment factories, some 48 are platinum rated and 91 are gold rated green factory buildings.

Bangladesh has been receiving increased volume of work orders from the international retailers and brands with the reopening of the global economies from the fallouts of the Covid-19.

The BGMEA President said prices of the exported goods also increased to a bit of per unit garment items because of price hike of the raw materials and for unusual hike in freight charge, which increased between 100 per cent and 400 per cent varying cases.

Despite price hike of the garment items, still the export value of the items to the US markets declined by 8.04 per cent between August last year and July this year because of the fallouts of the Covid-19 in the global apparel supply chain, he noted.

“So, it is my suggestions to the garment exporters to calculate the prices of per unit garment items and cost of production carefully so that they do not incur losses in the time of inflow of increased volume of work orders from the international retailers and brands,” said BGMEA President.

He opined garment manufacturers and exporters need to be more careful in price negotiation and cost of production as last year the RMG sector has faced cancellation and suspension of work orders worth $3.18 billion.

Faruque Hassan said they've now focused on communication, PR and branding to pull the industry ahead globally. "Image building and branding are now our main focused", he added.

Mentioning that communication is their prime goal now, he said it would help the apparel industry boost sourcing, pricing and order globally.