FW
If India chooses not to enter into free trade agreements, it can give an edge to its competitors. By choosing to enter, India can kill the chances of its domestic industry.
The concessional tariff offered to polyester yarn under India’s free trade agreement with Indonesia and Vietnam combined with the post-GST tariff rationalisation is harming the growth prospects of a section of domestic textile mills that deal with this manmade fiber. Polyester yarn imports are subject to zero duty while polyester staple fiber carries an import duty of five per cent. This makes yarn imports more attractive than import of yarn fiber for local production of polyester yarn. There has been an 855 per cent increase in the quantity of polyester yarn imports to India over the last 26 months.
On the other hand, India’s apparel exports have been facing challenges for the last two years due to other countries FTAs. India’s position in the EU market for instance has been adversely affected by the preferred access competing nations such as Bangladesh and Vietnam has by way of FTAs. These could make it increasingly difficult for India’s apparel exporters to maintain their competitiveness in its largest market, the EU, which accounts for about 35 per cent of India’s apparel exports.
Under the Regional Comprehensive Economic Partnership (RCEP), India may trim or remove tariffs on Chinese goods only in phases. Tariffs on the most sensitive items will be the last to go. India plans to reduce or abolish import duties on a total of 80 per cent of imports from China, against 86 per cent from New Zealand and Australia, and 90 per cent from Asean, Japan and South Korea.
While the RCEP will benefit India in better integrating with the global value chain and improving its trade competitiveness, several domestic industries — including steel and pharma — have strongly resisted any such deal on fears that cheap Chinese products, diverted from the US due to the ongoing trade war, will flood Indian markets. The dairy industry, in particular, is opposing any such deal with New Zealand, a major dairy producer and exporter.
RCEP is a proposed mega trade pact between the ten Asean members, India, Australia, China, Japan, South Korea and New Zealand. Of the 16-nation grouping, India currently doesn’t have any free trade agreement with China, Australia and New Zealand. The RCEP deal will be far more ambitious than any of its existing free trade agreements with Asean, Japan and South Korea.
Bangladesh’s yarn consumption has doubled over the last six years. This is because of the high demand from domestic garment manufacturers and the high volume of garment exports. In fiscal 2012-13, the country’s knitters and weavers consumed 10 to 11 lakh tons of yarn. Last year, the amount was 22 lakh tons. Imports are increasing because of cheaper yarn from India and China. So the garment sector, the country’s main export earner, is depending more on imported raw materials, which is a worry for domestic spinners. So spinners have lowered their production capacity to 77 per cent from 90 per cent over the last six months.
Despite a lot of internal and external shocks, garment shipments from Bangladesh have maintained robust growth over the last seven years because of competitive prices and a flawless supply of yarn and fabrics, which has reduced lead times significantly. Bangladesh’s garment exports to new destinations such as Japan, India and China have been growing at a faster rate in comparison to traditional markets like the EU, the US and Canada. Garment exporters have been receiving a lot of work orders because of the US-China trade war that compelled many international retailers and brands to come to Bangladesh.
Brands like Lenzing and Eileen Fisher are working toward goals like zero waste, clean water and sanitation. Lenzing’s goal by 2030 is to reduce emissions by 50 per cent and to be net zero by 2050. The company works with retailers and brands to support their own sustainability goals and educate consumers about them. Fiber producer Lenzing is the maker of Tencel. Eileen Fisher’s vision includes supply chain transparency, supporting regenerative agriculture and circularity. Consumers can bring used clothing to an Eileen Fisher store where it is cleaned and resold at lower prices if it is in good condition, chopped up and recycled, or used in wall installations. Eileen Fisher is a women’s clothing retailer.
Ambitious sustainability goals in the textile industry are being reached through partnerships between retailers, suppliers and other stakeholders. Because not every company can afford to maintain a large sustainability department, a way out is for companies – and competitors – to work together. In November 2018, a signed UN charter detailed how the fashion industry, whose practices have been criticized as environmentally detrimental, can reduce emissions by 30 per cent by 2030. The fashion industry sees it as an obligation, after inspiring consumer consumption, to now encourage consumers to reuse and recycle, in that order.
More than 300 readymade garment factories in Bangladesh face the threat of closure since they have failed to make the required remedial progress. Among other steps, their export license may be suspended. Some 3,780 garment factories were assessed for fire, electrical and structural integrity by Accord and Alliance and other initiatives after the Rana Plaza building collapse in April 2013 that killed more than 1,100 people.
Now factories are inspected jointly by experts supported by ILO and the buyers’ platforms Accord and Alliance. Bangladesh now has 67 LEED (Leadership in Energy and Environmental Design) factories, certified by the United States Green Building Council, of which 13 are platinum. Seven out of world’s top 13 LEED certified factories are in Bangladesh and 280 more are in the pipeline for getting certification. Meanwhile the labor law was amended in July 2013 and another revision of the law is in progress. A workers’ welfare fund has been created to which the garment industry alone contributed around 10 million dollars last fiscal year. Before the Rana Plaza tragedy garment factories focused only on child labor, limiting working hours, wages for overtime duties and on achieving technical compliance like fire extinguishers, gloves, boots, helmets for workers.
"Year 2024 will prove to be a milestone for Bangladesh as the country will graduate from being a Least Developed Country to a developing country. This will bring along a number of new challenges particularly its impact on the readymade garments industry. The industry will have to address issues like: How RMG entrepreneurs can improve their business and marketing? Which initiatives need to be undertaken for technological upgrading, social compliance, labour standards and rights compliance, to address the post-graduation challenges?"
Year 2024 will prove to be a milestone for Bangladesh as the country will graduate from being a Least Developed Country to a developing country. This will bring along a number of new challenges particularly its impact on the readymade garments industry. The industry will have to address issues like: How RMG entrepreneurs can improve their business and marketing? Which initiatives need to be undertaken for technological upgrading, social compliance, labour standards and rights compliance, to address the post-graduation challenges?
As the RMG sector is of paramount importance for Bangladesh’s macroeconomic performance, employment, export earnings and balance of payments, its positive implications in terms of social parameters, and overall, in projecting the ‘Brand Bangladesh’ to the world, answers to these questions are of heightened interest from the perspective of future development of not only the RMG sector, but also the overall performance of the Bangladesh economy.
Bangladesh to lose preferential market access
A major drawback will be that it will lose the preferential market access it currently enjoys due to the various
unilateral, and bilateral, regional and global initiatives. While the EU offers to extend this preferential market access for an additional three years, future market access scenario for the country will change profoundly in coming years.
The implications of Bangladesh’s LDC graduation will be felt more acutely in the RMG sector. RMG, which accounts for more than four-fifths of Bangladesh’s total global export earnings, faces high tariffs in almost all its key markets. For instance, on average apparels from Bangladesh are taxed at 12 per cent in the EU and between 16-18 per cent in the Canadian markets. Accordingly, their depth of preference erosion is significantly high in these markets.
Another disadvantage that Bangladesh faces on graduating to a non-LDC status is that the country will no longer enjoy the preferential status as a member regional trading arrangements such as the South Asia Free Trade Area (SAFTA). Its exports will also face an additional tariff of about 6.7 percent, on average.
The country’s RMG sector will also be impacted by indirect factors such as implications arising from stringent compliance requirements under the trade-related intellectual property rights (TRIPS) of the WTO, as also from changes in the support regime concerning the enhanced integrated framework (EIF) and the various special and differential treatment provisions of the WTO.
Though minimum wages in the RMG sector will continue to rise,competing development demands and current performance of domestic resource mobilisation will shrink the fiscal space that these types of incentives traditionally enjoyed.
Securing a common ground with other LDCs
To address these challenges, Bangladesh will have to secure common interests with other graduating LDCs. It will also need to design a support package for a sustainable graduation of these LDCs. This package should include targeted initiatives in areas concerning preferences (continuation), aid for trade (additional) and special and differential treatment (in selected areas of interests to these countries), at least for a few additional years.
Bangladesh can also extend preferential treatment under unilateral LDC schemes, such as those run by India and China, for some years following graduation. However, it needs to keep in the purview its future as a non-LDC developing country, and argue in favour of strengthening market access and other special and differential provisions in the WTO in support of the developing countries.
Bangladesh currently is not a part of any bilateral FTAs. To form such FTAs, the country needs to strengthen its analytical and negotiating capacities. It also needs to ensure compliance with the current labor, social, technical, intellectual property rights, environmental standards.
The next few years will provide Bangladesh enough space to design appropriate strategies for its sustainable transition from the LDC category. Concerned stakeholders must demonstrate their ability to address the anticipated post-graduation challenges with a proper homework and prepare for the post-2024 future of the RMG sector with the urgency that the attendant tasks demand.
For the first time, The World Fashion Convention will be held in Lahore, Pakistan. The 35th edition of the event will be held in November 2019 in collaboration with International Apparel Federation (IAF). The mega fashion show will host delegates from over 45 countries.
Several world-renowned speakers, well-known fashion designers, buyers, brands and fashion houses will attend the multi-day mega fashion show featuring panel discussions, lectures and workshops about the textile and garment industry.
The textile associations that will participate in the event include All Pakistan Textile Mills Association (APTMA), Pakistan Textile Exporters Association (PTEA), Pakistan Hosiery Manufacturers & Exporters Association (PHMA), All Pakistan Textile Processing Mills Association (APTPMA), Pakistan Bedwear Exporters Association, Pakistan Cotton Ginners Association (PCGA) and Towel Manufacturers Association of Pakistan (TMA) etc.
The main focus of the event is to project a positive image of Pakistan before the world leaders. It also aims to shed light on the textiles and apparels produced by the country and allow its exporters to interact with the international textile chain.
Building on a successful first year, PhytoGen, the U.S. cottonseed brand of Corteva Agriscience, will renew its partnership with Cotton Incorporated’s Blue Jeans Go Green denim recycling program for 2020. PhytoGen will organise denim collection drives at industry events across the cotton belt to help promote sustainability and reduce textile waste.
In early 2019, PhytoGen became the first cottonseed company to collaborate with the Blue Jeans Go Green program, an initiative that upcycles denim garments into premium housing insulation and keeps denim out of landfills. PhytoGen collected 7,412 items through donation drives at cotton industry events and company locations in 2019.
Local FFA and 4-H chapters participated by collecting denim in their communities. PhytoGen presented $1,500 to the chapters donating the most denim items at each PhytoGen Blue Jeans Go Green program drive. The winning chapters were Star City FFA (Arkansas), Olton FFA (Texas), Thomas County Middle FFA (Georgia) and La Paz 4-H (Arizona).
In 2020, PhytoGen will hold denim collection drives at the Mid-South Farm & Gin Show, the Texas Cotton Ginners’ Show and the Desert Ag Conference. Prizes will be awarded to the winning FFA or 4-H chapter at each location. But anyone is welcome to participate and drop off denim during the three events.
Tukatech has opened its new TUK Acentre in Bengaluru, India that will bring start-up companies, e-commerce companies, brands, and supply chains on the same platform. The one-stop centre will offer services such as plotting, pattern making, grading, marker making, and sample making, and through to cut and sew and supply chain guidance. Its five-storey building designed for collaboration or private meetings will offer desks and private meeting spaces.
Designed in collaboration with Jagdish Chawla, founder of Design Wolf Studio, this unique centre goes beyond a full-service facility. Fashion professionals can take advantage of apparel CAD, 3D virtual sampling, sample cutting, and sewing. A communal micro-factory concept will assist in the production of small runs.
Tukatech is the garment and apparel industry’s leading provider of end-to-end fashion technology solutions. The TUK Acentres offer a complete array of services for fashion design and development, and the most-advanced fashion technology and industry knowledge for any type of apparel customer.
The new Brazilian initiative, ‘Cotton in Organic Farming Consortium’ will aid approximately 800 farming families by strengthening organic cotton production in seven Brazil states over the next two years.
The initiative is supported by the C&A Foundation along with the NGO Diaconia, Embrapa Algodão and the Fedeal University of Sergipe (UFS). It aims to reinforce the management of the Participatory Conformity Assessment Bodies (OPACs) - associations representing the families of farmers certified to issue the organic product seal.
Though cotton is the fiber most used in the fashion industry, less than 0.1 per cent of Brazilian cotton is organic. Organic cotton does not require toxic chemicals, does not damage the soil, and has a lower impact on the air and uses 71 per cent less water and 62 per cent less energy.
As cotton farming is an important source of income for producers in these regions, the transition from conventional cotton to organic farming is an opportunity to improve the lives of the farmers in Brazil.
