The new beginning of Bangladesh’s apparel export in US

Lessons Pakistan can learn to improve its trade with the West

Bangladesh’s apparel shipment to US, the country’s single largest export destination, increased by about 51 percent compared to last year. In the first 9 months of this year, the country has exported a record of more than 7.5 billion US dollars in clothing. Noteworthy, Bangladeshi apparel makers are getting a strong foothold in the United States of America market as exports posted robust growth in recent times. Despite the global recession, the export of Bangladeshi-made garments to the United States has increased at a significant rate.

 

According to “The Office of Textiles and Apparel (OTEXA)”, Bangladesh’s garment exports to the US market dropped slightly to $690 million last July but rose again to over $900 million in the next two months. During the last nine months of the current fiscal year, Bangladesh fetched billions from the US market by exporting primarily trousers, T-shirts, sweaters, blouses, underwear, etc. With an 8.54 percent export share, the country remained the third largest apparel import source for the US.

 

The Triumph of Bangladeshi Garments in US

The United States of America is the single largest export destination for Bangladesh. Over 21.50 percent of apparel export earnings came from this huge market. Bangladesh supplies quality goods at affordable prices, while the US buyers are happy with the safety standard of the industry. The surge in the export earnings comes at a time when the Western countries, the main buyers of Bangladesh apparel, are fighting a depressed demand mainly due to the energy crisis caused by the Russia-Ukraine war. The USA also is facing the effect of a global economic recession as interest rates in the country are going high, and energy prices also have gone up. But people are still buying clothes there. The import figures indicate that USA’s retail industry is witnessing a fast recovery from the Covid-19 crisis.  

 

Among the top 10 apparel suppliers to the US, imports from India, Indonesia, Cambodia, Pakistan, and South Korea grew 53.39 percent, 54.66 percent, 46.58 percent, 40.11 percent, and 39.61 percent year-on-year, respectively. Earlier last year, Bangladesh exported 7.15 billion dollars worth of ready-made garments to the US market, which was about 37 percent more than in 2020. The better-than-expected growth came as consumer spending increased more than in the government’s previous reading, while the value of imports was revised down. Imports are subtracted from GDP, which is the broad measure of economic activity within the country.

 

Despite a surge in raw material prices the resumption of shipment of on-hold consignments and focusing more on diversification, the Bangladesh export market is creating a better option for all types of buyers.

 

On a positive trend, the export earnings in the first five months of FY23 grew by 11% compared to last year’s corresponding period, the latest export data showed. This achievement raised hope of easing the growing foreign exchange crisis Bangladesh has been suffering since July this year. Despite a surge in raw material prices the resumption of shipment of on-hold consignments and focusing more on diversification, the Bangladesh export market is creating a better option for all types of buyers.

 

A Silver Lining for Bangladesh’s Export Growth

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said, “The apparel orders, which had been declining in the past few months, marked an upward trend because of product diversification and adding new export destinations”. He expressed hope that the order will go up further during winter and the Christmas celebrations as the Bangladesh supply capacity is good and the prices of clothes are very reasonable so far.

Bangladesh is exporting very essential clothing items at a reasonable rate, whose demand has increased slightly in the European market. However, European markets are mainly knit item driven while the US market is driven by woven items. Bangladesh’s export destination in EU-plus countries, the UK, Canada, and the USA will grow continuously, as the sign of ending the Russia-Ukraine war is being visible. Exporters have expressed hope that increased business in the USA would make up for any possible export losses in European countries as they are going into an economic recession. 

 

Again, Bangladesh’s exports to the US will continue to increase in the coming days as China is shifting its apparel manufacturing by itself and at the same time the US is shifting its sourcing from China in a big way. Exporters said that the US had been shifting its sourcing from China gradually and Bangladesh getting the benefit. Bangladesh was also getting additional export orders from the US due to political instabilities in Myanmar and Ethiopia.

 

Continued growth in exports to the US market is a silver lining for the overall apparel sector of Bangladesh despite the threat of a slump in demand in European countries amid an ongoing recession. At the same time, the US dollar has become stronger than the taka, which also helped to increase its purchase capacity. This is reflected in increases in prices considering unit and square meter value (SMV) and exports of value-added products.

 

The USA is an old and trusted trade partner of Bangladesh. But compared to other countries, Bangladesh now pays the highest tariff on its apparel products exported to the United States, which profusely reduces Bangladesh’s competitiveness in the US market. Bangladesh has proposed zero tariffs on finished apparel products — made with American cotton — being exported to the US at the 6th meeting of the US-Bangladesh Trade and Investment Cooperation Forum Agreement (TICFA) held in Washington DC on 6 December. It is hoped that the USA might consider opening the tariff free window again for Bangladesh. That way, one day Bangladesh can secure its top rank in the at US’s apparel export outpacing China.

Mehjabin Bhanu
Mehjabin Bhanu
The writer is a freelance columnist

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