Vietnam replaces Bangladesh as second largest apparel exporter in Canada

Vietnam became the second largest apparel exporter in Canada in 2022, leaving Bangladesh behind, mainly because of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that allows duty-free access for trade in goods between the two countries.

In 2022 calendar year, Vietnam exported apparel items worth US$1.75 billion capturing a market share of 14.1 per cent after China that shipped US$3.76 billion with a market share of 30 per cent, data showed.

Bangladesh earned US$1.73 billion from garment exports to Canada capturing 13.9 per cent of the market while Cambodia earned US$1.28 billion in the same period.

"With tariff preference, Bangladesh captures more than 22 per cent of extra-EU apparel imports. But in the Canadian market, the country is already under pressure as Vietnam became the second largest exporter due to duty benefit there," Dr M A Razzaque, chairman of Research and Policy Integration for Development, said.

Bangladesh's readymade garment exports to Canada currently enjoying duty-benefit are likely to face 17 per cent duty, once the country graduates from the least developed country (LDC) status in 2026, he said adding by this time Vietnam will enjoy zero duty.

Citing data, he said LDC tariff preference has been critical for Bangladesh in raising its share of the clothing export to the EU. Bangladesh has been taking the advantage of China's market share in the EU while Vietnam takes most advantage of the same in the USA and in recent times also in Canada.

He was sharing the statistics at a meeting on 'identifying issues relating to the upcoming new EU GSP regulations' while explaining different aspects of the EU's new proposed GSP regime 2024-34 set to come into effect from 2024 and its possible implications for Bangladesh, especially readymade garment exports.

Senior commerce secretary Tapan Kanti Ghosh was the chief guest at the workshop moderated by Md Abdur Rahim Khan, additional secretary of the ministry.

Senior trade consultant at Bangladesh Regional Connectivity Project-1 Dr Mostafa Abid Khan, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) vice president Fazlee Shamim Ehsan, Bangladesh Terry Towel and Linen Manufacturers and Exporters Association chairman Shahadat Hossain, Bangladesh Garment Buying House Association (BGBA) general secretary Aminul Islam, among others, spoke on the occasion.

Mr Razzaque also said though Bangladesh would continue to enjoy the duty-free market access to the EU until 2029 and Bangladesh could apply for GSP plus, local RMG might not get the duty waiver benefits under the GSP plus arrangement due to proposed safeguard measures in the EU GSP scheme.

According to the proposed regime, if the combined share of knitwear, woven and home textile under HS Sections 61, 62, and 63 (EU defines these items as "product group S-11b") from a country exceeds 6.0 per cent of the total EU imports of the same products, safeguard measures would be used to remove the duty-free market access for these items.

Bangladesh's share in total EU imports of these items is more than 13 per cent.

A GSP+ beneficiary will not receive preferential access if the share of these relevant products exceeds the product graduation threshold of 37 per cent while Bangladesh's garment exports are 50 per cent and apparel products will be excluded from both GSP+ and Standard GSP preferences.

The 'safeguard clauses' would be applicable after 2029 under the GSP plus regime and the average tariff rate on export of the S-11b products from Bangladesh would be an average of 12 per cent against the existing zero tariff.

GSP plus also requires 32 international conventions to be ratified and implemented, he said.

The meeting participants, however, asked whether it was worth considering GSP plus, if Bangladesh doesn't get tariff preference for garments.

Participants suggested effective negotiations so that EU withdraws its proposed safeguard measures for Bangladesh.

They stressed both government and private level moves to address the post-graduation challenges with product diversification, innovation and efficiency enhancement.