GENEVA — The economy of Bangladesh is too dependent on exports of textiles and apparel — largely to the U.S. and European Union — and needs to diversify its base of export products and markets, a World Trade Organization report said.
The report by the WTO secretariat said Bangladesh, one of the world’s poorest countries, should push ahead with reforms at a faster pace to reduce poverty and help the economy “better cope” with the lifting of global quotas in textiles and apparel.
The WTO review of Bangladesh’s trade policy said the South Asian nation “should be able to maintain some of the competitive edge” in the EU and Canadian markets, in view of its duty-free access. The country should also “be able to compete in the high-volume, low-margin segment of the world apparel market, in particular as buyers are diversifying their source of supply in order not to be become overdependent on a few major exporters, such as India and China.”
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Nevertheless, the WTO study outlines that with heightened global competitive price pressures, Bangladesh “risks losing significant market share, particularly in the woven garments segment, in the United States.”
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In the meantime, private sector operators have indicated that in the post-quota setting, the situation “was manageable,” as no major adverse development had taken place in the export climate and that “orders had held up well” and new investments for expansion had been reported, the study noted.
In 2003-2004, apparel shipments accounted for more than 80 percent of Bangladesh’s merchandise exports. However, 93.7 percent of the apparel exports were absorbed by just two markets: the EU with nearly 65 percent and the U.S. with 29 percent.
In the same time period, apparel exports accounted for a 76.6 percent share and textiles for 6.7 percent of the country’s total merchandise exports of $5.7 billion.
Feroz Ahmed, secretary of the ministry of commerce of Bangladesh, told delegates at a WTO session on the review that the sector accounts for about 75 percent of the country’s total exports. The U.S. delegation said in 2005 the U.S. purchased $2.7 billion of products from Bangladesh, an increase of 17 percent from the previous year.
Ahmed said despite the sharp price rises for essential commodities and the abolition of quotas, economic growth has been “fairly steady and robust, at an annual rate of more than 5 percent.”