Centre for Policy Dialogue, 2004, “Surviving in a Quota-Free World: Will Bangladesh Make It?,” Centre for Policy Dialogue (Dhaka).
Mlachila, Montfort and Yongzheng Yang, 2004, “The End of Textiles Quotas: A Case Study of the Impact on Bangladesh,” IMF Working Paper No. 04/108, (Washington: International Monetary Fund).
Osmani, S. R., Wahiduddin, Mahmud Binayak Sen, Hulya Dagdeviren, and Anuradha Seth, 2003, “The Macroeconomics of Poverty Reduction: The Case Study of Bangladesh,” UNDP (Dhaka).
Rahman, Mustafizur and A. Anwar, 2005, “EU Sanctions on Import of Chinese Apparels: Implications for Bangladesh,” CPD Trade Policy Brief, Vol. 2, 4, Centre for Policy Dialogue (Dhaka).
World Bank, 2005, “End of MFA Quotas: Key Issues and Strategic Options for Bangladesh Ready Made Garment Industry,” World Bank (Dhaka).
Prepared by Jonathan Dunn (APD).
World Bank (2005), p. 24.
The ATC replaced the MFA on January 1, 1995 and textile and clothing quotas were phased out in four steps under the ATC over the following ten years.
Knitwear includes all garments sewn from knitted fabric (e.g., t-shirts, undergarments) and garments, such as sweaters, that are knit from yarn. Woven garments refers to all garments sewn from woven fabric (e.g., dress shirts, shorts, trousers), including all denim products.
World Bank (2005), p. 45. Cross-country survey results from 2002 (latest available) show that productivity-adjusted per unit labor costs for dress shirts and jeans in Bangladesh were $0.23 and $0.24, respectively. Analogous per-unit labor costs were between $0.29 and $0.77 in other major Asian garment producing countries. It should be noted that the contribution of productivity-adjusted costs for overhead, transport, etc. are not included and these data therefore do not necessarily indicate that Bangladesh has the lowest total overall production costs.
The knitwear sector in Bangladesh is generating large efficiencies through the operation of groupings of spinning, fabric knitting, dyeing, finishing, and knitwear firms that are effectively operating as conglomerates, thereby reaping many of the efficiencies of vertical integration in a sector where individual capital shares and firm size remain relatively small.
Woven garments account for almost 74 percent of Bangladesh’s garment exports to the U.S., a market in which Bangladesh’s denim products are highly competitive.
The others are Cambodia (U.S.), India (EU and U.S.), Indonesia (U.S.), Philippines (U.S.), and Vietnam (EU and U.S.).
Producers and buyers say that the garment industry in Bangladesh is improving compliance with respect to labor and safety standards but is making less rapid progress with regard to environmental concerns. Producers express concern about the erosion of their cost advantage if they raise environmental standards more quickly than their major competitors. This should not, though, be a major factor so long as buyers insist on equal compliance improvements across major LIC garment producing countries.
In January 2006 China granted Bangladesh duty free access for 84 items, including some RMG and textile products. Some Bangladesh-based producers believe that their products are already competitive within China, especially for low-end garments. India has recently agreed to allow Bangladesh to export 6 million pieces of garments duty-free to India, though details on the composition of goods and ROO for the inputs are still being discussed.