The apparel sector is the prime industrial sector and a major pillar of our economy. The sector is making a tremendous contribution to our socio-economic development through employment generation, export earnings, poverty reduction, and women empowerment.
Since the establishment of formal diplomatic ties in 1972, the United States has greatly contributed to Bangladesh’s development so far. The bilateral economic relationship between Bangladesh and USA has been growing significantly in the past decades. The USA is the third largest bilateral trade partner for Bangladesh.
As per the data of the Bangladesh Bank and Export Promotion Bureau (EPB), in the last 10 years that means from 2012 to 2022, the bilateral trade between the two countries has increased by 8.64% annually (CAGR). In fiscal year 2021-22, the bilateral trade between Bangladesh and the USA was worth USD 13.24 billion, while Bangladesh’s exports to and import from the USA were USD 10.41 billion and USD 2.82 billion respectively.
The export of Bangladesh is mostly concentrated on a few items, especially readymade garments. More than 87% of Bangladesh’s total export to the USA comes from the RMG sector. Bangladesh is the third largest apparel source for the USA. Our share in the USA’s total apparel import is 9.75%. In the last five years, USA’s apparel import from Bangladesh has increased by about 14% annually. USA imported US$ 9.74 billion worth of apparel from Bangladesh in 2022 which was US$ 7.16 billion in 2021 and US$ 5.40 billion in 2018.
Apart from the RMG, textile articles, headgear and parts, articles of leather, prepared feathers & artificial flowers, furniture & bedding, etc. have also emerged as promising items of export to the USA in recent years.
Since the share of Bangladesh in the USA’s apparel import is only 9.75%, we have a huge opportunity to increase the share further. Bangladesh has already gained the top position in USA’s denim. The USA imported 943.70 million dollar worth of denim from Bangladesh in 2022 which was 22.64% of its total denim import. So far we are doing well in those products in the USA market. But there are a few more product categories where we have the potential to further penetrate. Besides, we still have a number of US brands yet to source from Bangladesh or are sourcing at a limited scale. So, while we urge for diversifying our markets, we think we still have a huge scope of specialization in the existing ones where the US investors and traders can play an important role.
Though we have already become the largest cotton-made apparel import source for the USA very recently, in non-cotton apparel we are still lagging behind.
Within the textile sector, there are many items particularly woven, non-cotton yarn and fabrics, functional fabrics like polyester, viscose, spandex, mélange, etc. where we have a huge scope of investment.
We also need investment in up-scaling innovation, product and design development. We need adequate expertise in technology and modern machinery.
We are now promoting the circular economy in the industry, especially since we have the raw materials for the recycling industry which are cotton textile scraps. If we can turn the 500 million dollars worth of these scraps into 5 billion dollars in recycled goods, this will add to our export turnover, employment, and national economy.
Apart from textiles, we have other potential sectors like Jute, leather, pharmaceuticals, ceramic, ICT, and shipbuilding where we need investment.
Our Government is also relentlessly working to improve the country’s trade competitiveness and logistic capacity.
There have been a few issues in trade between the USA and Bangladesh, especially the cotton fumigation requirement while importing cotton from the USA. Our government has already waived the mandatory fumigation requirement for importing cotton from the USA. This will certainly reduce the time and cost of business for our importers.
We are now approaching the U.S. government to consider duty-free market access to the U.S.A. for garment made of US cotton. This may be noted that a significant share of our apparel is made of cotton. Since Bangladesh does not grow cotton, almost 99% of our cotton is imported. This makes us the second-largest cotton-importing country in the world. Last year we imported 4080 million pounds of cotton from the world of which almost 409 million pounds were imported from the U.S.A. Furthermore, the cotton that we import for the export-oriented RMG industry comes completely free of import duty, which gives a cost advantage to cotton growers and exporters.
On the other hand, U.S.A. importers have to pay duty to import apparel from Bangladesh. The average duty on all imported products from Bangladesh was amongst the highest in 2022, and the import tariff on clothing items from Bangladesh was even higher. Given our growth potential and duty-free import facilities of cotton in Bangladesh, the US cotton growers and exporters can further exploit opportunities if duty-free access is granted to apparel made of US cotton. The proposed duty-free treatment will benefit U.S. cotton through increased demand and earning premium prices. It will also benefit U.S. consumers, especially the middle and lower-income groups for whom clothing and other essentials comprise a major share of expenses. As the apparel items face the highest tariffs, the waiver will benefit both U.S. consumers and its cotton growers in this difficult time. At the same time, Bangladesh will gain an extra edge as a preference for U.S. cotton.
We hope the U.S.A.-Bangladesh bilateral relations will reach to a newer height where the U.S.A. will be a critical partner in Bangladesh‘s journey towards prosperity driven by trade and investment.
Author: Faruque Hassan, President, BGMEA
