Bangladesh’s ready-made garment (RMG) exports to the European Union could face a significant decline of up to 21 per cent due to the implications of the EU-Vietnam Free Trade Agreement (FTA) and the country’s impending graduation from Least Developed Country (LDC) status. This alarming forecast comes from a recent study conducted by RAPID and the Friedrich-Ebert Stiftung.
The report indicates that Bangladesh will lose its duty-free access to the EU market under the Everything But Arms (EBA) initiative, leading to potential tariffs of up to 12 per cent after 2029. In stark contrast, Vietnam is projected to benefit from zero-duty access by 2027, thanks to substantial investments in its supply chain and efficient trade policies.
Bangladesh is currently at a disadvantage due to its slower progress in backward integration and implementation of effective policies, which threatens its competitiveness in the global market. The study urges the Bangladeshi government to negotiate extended transition periods with the EU for LDC status, relax rules of origin under the Generalized Scheme of Preferences (GSP+), and pursue additional FTAs to maintain market access.
Moreover, the report stresses the importance of adhering to EU standards on sustainability and labor practices. It highlights the necessity for investments in man-made fibers, recycling technologies, and improved trade infrastructure to boost competitiveness.
While negotiations for FTAs with Japan and Singapore are ongoing, experts are cautioning that Bangladesh must diversify its export base and address structural issues to sustain growth. Although labor shortages in China and Vietnam could shift orders to Bangladesh, persistent challenges such as energy supply deficits and banking inefficiencies remain obstacles to progress.
The study concludes that Bangladesh must adopt timely policies and align with global sustainability standards to secure its position as a competitive export hub in the future.
