Bangladesh may lose its competitiveness in apparel exports over TPP

The current round of negotiations for the Trans-Pacific Partnership (TPP) if leads to a deal it would create a preferential trade zone between 11 countries including Vietnam, Bangladesh’s direct competitor in the global apparel market, and the US, the country’s single largest garment export destination.

At present, Bangladesh pays 15.62 percent duty for its garment exports to the US, whereas Vietnam pays 8.38 percent. If the TPP is signed, garment exports from Vietnam will enter the American market completely duty-free and Bangladesh is set to lose its competitiveness in apparel trade.

Vietnam will be a big beneficiary from the deal, said Ahsan H Mansur, executive director of Policy Research Institute. He could not quantify how much Bangladesh will lose every year as a result of the deal.

For a deal, the US is currently negotiating with Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

The TPP is a comprehensive agreement that will open markets, set high-standard trade rules and address 21st-century issues in the global economy. In so doing, it will promote jobs and growth in the US and across the Asia Pacific region.

Mansur said that if Bangladesh had been a strong player in raw material exports such as yarn, fabrics and fibres, it would have benefited slightly from the deal. But they do not export garment raw materials.

The average tariff of Bangladesh is 55 percent, which is too high for openness of the country’s business. He said that Bangladesh should liberalise its tariff structure as some other countries have the opportunity to join the TPP in the near future.

However, Bangladesh’s garment exports to other nations of TPP like Canada, Japan, New Zealand, Australia and Chile might not be hampered, as it already enjoys zero-duty benefit to those countries.