As per BGMEA, Vietnam’s recent FTA with EU is likely to have a significant impact on its own business as around 11 per cent of Vietnamese apparel exports to EU will get a complete duty wiaver. The EU signed the free-trade deal with Vietnam on June 30 in Hanoi, paving the way for tariff reduction on 99 per cent of goods, traded between the bloc and the Southeast Asian country. The trade deal will be effective after approval by the European Parliament.
Bangla media reports, around 12.18 per cent share of Bangladesh’s apparel exports to EU competes with Vietnam on these items. These items—147 in number—will face stiff competition and the possibility of trade diversion is higher in this category Bangladesh apparel exports have lost 3.64 per cent value in terms of price per unit during 2014-2018, whereas Vietnam’s price has gone up. With the gradual elimination of tariff on Vietnam’s exports the price competition will be more intense.
Within five years, 49 per cent of Vietnam’s and 62 per cent of Bangladesh’s total exports to EU will be competing directly. Apart from erosion of competitiveness and resulting trade diversion, this FTA may take a severe toll on the price level of the Bangladeshi manufacturers.
