The United States of America and Europe have long been the principal destinations for apparel exports from Bangladesh. It was the business privileges that Bangladesh enjoyed as an LDC which helped it to strengthen its stronghold in these two important markets. But, it was only till the infamous Rana Plaza incident!
Considered Bangladesh’s worst industrial disaster, the eight-storey Rana Plaza building collapse on April 24, 2013 which claimed lives of 1,135 people besides injuring thousands more, changed the business equation between USA and Bangladesh with the former revoking the GSP facilities, also known as preferential tariff system on June 27, 2013, at the insistence of the influential US trade union, American Organisation of Labour-Congress System for International Organisation or AFL-CIO. Under the GSP programme, Bangladesh had benefitted from exporting around 5,000 different items to the US market tariff-free, which is now gone. It created a sense of vulnerability amongst the garment exporters. The EU however, continued with its trade benefits unabated.
Comparable in market size and opportunities, Bangladesh’s export figures to the EU and the US in the corresponding years following the Rana Plaza disaster stand as follows. In 2015, Bangladesh’s export to EU was 59.78 per cent of its total exports, which increased to 62.60 per cent in 2016 and made a further improvement in 2017 to touch 64.00 per cent while in case of USA, Bangladesh’s export to US was 21.27 per cent of total its exports in 2015, which fell to 18.73 per cent in 2016 only to witness a further dip in 2017 to stand at 17.96 per cent.
In terms of Bangladesh’s share in EU and USA, the total apparel import stands at 18.67 per cent and 6.31 per cent respectively in 2017.
In terms of non-traditional markets, in 2015 Bangladesh’s export to these markets was 15.29 per cent of its total exports, which increased further in 2016 to touch 15.30 per cent only to falter in 2017 and touch 14.70 per cent.
Considering Bangladesh’s target of reaching US $ 50 billion in apparel exports by 2021, which currently stands at around US $ 31 billion and requires around 13 per cent CAGR from here on, it would require more than just EU.
Also to be taken into account that garment as a whole is not a strongly growing market (when compared to electronics, leisure, FMCG, etc.), which coupled with the fact that many of the non-traditional markets (China, India, Turkey, South America, etc.) have their own manufacturing bases while also taking into account the market dynamics (percentage share, saturation level, growth opportunities, etc.), Bangladesh would have to increase its share in the US market if it is to fulfill its long-cherished goal of US $ 50 billion in apparel exports by 2021.