EU-Bangladesh diplomatic relations were established in 1973. In 2001, a cooperation agreement was signed extending trade, economic and development cooperation, human rights, good governance, and the environment. The EU is supporting endeavors by the Government of Bangladesh, the private sector, and other stakeholders to further improve labor standards, health and safety, and the protection of rights in order to enhance this success story.
Recently, Textile Focus had a conversation with H.E Michael Miller Ambassador of the Delegation of the European Union to Bangladesh. Key discussion points are mentioned here for our readers-
Textile Focus: How do you see the current scenario of the Bangladesh Economy and what’s your observation regarding the contribution of the T&A Industry?
Michael Miller: Bangladesh is not alone in experiencing a series of challenges, currently. There is considerable uncertainty in international trade and, in Bangladesh, there is the additional impact of the long-standing weaknesses in economic governance, financial sector oversight and data manipulation that the interim government inherited in August 2024.
In recent months, nevertheless, we have seen signs of green shoots of recovery, driven by strong export performance and remittance inflows, alongside Bangladesh’s efforts to liberalise the exchange rate system and bolster foreign exchange reserves, with impetus provided by the IMF.
Reforms in the financial sector and concerted efforts to improve economic governance should lay the groundwork for more robust, sustainable and diversified growth in the future. Such reforms are crucial for Bangladesh as it prepares for graduation from least developed country (LDC) status. The contribution of the textile and apparel sector is undeniable, as it constitutes Bangladesh’s main export. In 2024, garments accounted for nearly 90 percent of Bangladesh’s €20 billion exports to the EU.
Textile Focus: Due to the current situation, how can Bangladesh export more RMG to the EU Market?
Michael Miller: RMG exports enjoy duty free and quota free access to the European Union’s single market under the Everything but Arms (EBA) market access scheme for LDCs. Bangladesh makes very good use of this access: your GSP utilisation rate in the EU is over 95 percent. As Bangladesh moves forward with graduation, EU market access will certainly continue but there will be incentives to shift production to more value-added production in Bangladesh, including upstream investment, and to diversify. We consider it particularly important to promote the Bangladesh brand as one that is innovative and reliable. All stakeholders need to understand this, and in addition take forward a robust and ambitious reform of the Bangladesh Labour Act (BLA) in line with Bangladesh’s own commitment under the National Action Plan (NAP) for the Labour Sector (2021-2026).
Textile Focus: Now Bangladeshi Apparel exporter wants to stop LDC graduation, what are the trade opportunities and current challenges between two countries?
Michael Miller: The interim government has indicated its strong support for LDC graduation, and your data suggests that you have reached the thresholds for this. The EU priority is to ensure a smooth graduation.
To ensure a smooth transition, the EU has announced a three-year interim period from graduation until 2029. We are also working closely with the government of Bangladesh to improve labour and environmental standards, which is a prerequisite for accessing the EU’s next most generous trading scheme for developing countries, known as GSP+. Key to accessing the GSP+ is the implementation of the NAP and aligning the labour law and EPZ labour law with ILO Conventions. We expect this to happen by July this year, and have been impressed by the commitment of the interim government to the process. On substance, we trust the final product will be as ambitious as possible and reflect EU expectations and ILO recommendations.
Textile Focus: After the BIDA summit, how do you see the opportunities for EU companies to invest in the backward and forward linkage industry?
Michael Miller: The BIDA Summit sent a strong signal that Bangladesh is serious about attracting foreign investment. We are working with the interim government to ensure that EU investors already present in the market are able to act as ‘brand Ambassadors’, relate positive stories and lay the foundation for more EU investment. Our newly-established European Union Chamber of Commerce will play a key role in this respect. Currently, however, it remains the case that EU investors face deterrents such as excessive tariffs closing the market, an unpredictable regulatory environment, difficulties with license renewals, work permits, corruption, customs clearance, and other non-tariff barriers.
Post-investment challenges, including weak contract enforcement and an uneven playing field, also hinder foreign direct investment. By simplifying administrative processes, reducing corruption, and enhancing digitalisation, Bangladesh can significantly boost its attractiveness to EU investors. The EU is not requesting special treatment but the existence of a level playing field. The backdrop for this request is a trade deficit that exceeds EUR 18 billion. Market opening and ambitious reforms – so that EU world leaders in technology, machinery and innovation can invest, set up joint ventures, repatriate profits and enjoy swift access to contract enforcement – is now needed.
Textile Focus: How does the EU support the RMG sector to mitigate the energy crisis through rooftop projects?
Michael Miller: Renewable energy is a key priority for the EU in Bangladesh, which is why we led the Renewable Energy session at the Bangladesh Investment Summit in April. Our flagship activity in this area is the EUR 395 million Bangladesh Renewable Energy Facility. This is a mix of EU-backed loans and grants. European companies in Bangladesh are pushing to green the production of their suppliers in Bangladesh, which our EU consumers rightly expect. But right now, renewable energy is just a small slice of Bangladesh’s energy pie: only 4.5% of installed capacity. Plus, the grid is too unstable for electrification of the RMG sector.
An important tool to promote further the green transition will be the use of Corporate Power Purchasing Agreements, like the one between PRAN/RFL and H&M announced at the BIDA Summit. We count on the interim government to quickly deliver the relevant policy tweaks needed to get such PPAs off the ground. The EU is also teaming up with the EU Member States, the European financial institutions, EIB, KfW, AFD and Norway and Switzerland in the Team Europe Initiative on the Green Energy Transition. Here, we have, as well as, committed EUR 1.3 billion to boost energy efficiency, renewables, and the transformation of the grid, with grants, loans, technical assistance.
A good, practical, example of our work in Bangladesh is the project the EU ran with AFD, KfW, and GIZ to upgrade safety and environmental aspects in the RMG sector, which helped over 60 factories with loans and performance grants for the installation of modern effluent treatment plants, solar panels and energy-efficient machinery. We are now discussing a possible phase II, which we intend to the RMG sector, but also the textile and leather sectors. Another relevant project is the EUR 20 million EU Switch to Circular Economy programme, co-funded with Finland, which is introducing circular economy concepts through pilots implemented by UNIDO. Under this programme, the EU is providing EUR 4m to finance two pilots in Bangladesh in plastics recycling for the garments industry. The European companies involved in these two pilots are Bestseller and H&M.
