Duty-free UK market: Potential non-RMG sectors fail to take its advantage

Bangladesh’s potential non-RMG sectors couldn’t take full advantage of duty-free access facilities in the UK markets despite having huge demands for such goods there.

eadymade garment (RMG) exports to the market more than doubled over the last one decade, but sectors like agro-and processed food, fish particularly shrimp, leather and footwear, and light engineering products failed to grow their footprint.

Data showed that Bangladesh fetched US$4,828.08 million from exports to the United Kingdom (UK) – $4,497.22 million or more than 93 per cent came from RMG in the last fiscal year (FY).

Only $330 million or less than 7.0 per cent came from other products like leather goods and footwear, frozen fish and shrimp, bicycle and agro-and processed foods, ceramic, jute, carpet and home textiles.

Bangladesh exported goods worth $2,444.57 million, including RMG $2,130.07 million or more than 87 per cent, in FY 2011-12 while the export earnings from non-RMG items were only $314.5 million or less than 13 per cent, according to data.

The UK introduced its new trade preference called DCTS (Developing Countries Trading Scheme) this year, making a departure from the EU’s Generalised System of Preference (GSP).

Experts and economists said Bangladesh as an LDC enjoys duty-free market access under the ‘DCTS Comprehensive Preferences’ and after its graduation in 2026, Bangladesh will continue to enjoy the same preference for three more years until 2029.

The benefit will be applicable to more than 85 per cent of the country’s UK-bound product lines under the ‘DCTS Enhanced Preferences’.

As an LDC, Bangladesh also stands to benefit from more generous UK Rules of Origin (RoO) as the minimum value-added requirement for LDCs has been reduced to 25 per cent from 30 per cent in half of the chapter headings (48 chapters) defined at the HS 2-digit level.

The DCTS exempted countries from the requirement to ratify and implement certain international conventions as a precondition for enjoying the trade preferences, the trade experts added.

Talking to the FE, Dr MA Razzaque, chairman of the Research and Policy Integration for Development (RAPID), said the DCTS can be a game changer for Bangladesh to break into the non-RMG export sectors like leather goods and footwear (both leather and non-leather footwear), shrimp, agro-and processed food, and bicycle.

“But what we’ve found in our recent consultation meetings are lack of information on both ends, absence of linkages between buyers and exporters, UK’s stringent standards and compliance, and lack of globally accepted certification are the major impediments,” he noted.

“There is a lack of information – the exporters are unaware of the market, its demand and standards while the buyers don’t know there are exporters of quality goods or competitive export sectors other than RMG,” Mr Razzaque added.

He suggested bridging the buyers and exporters in the supply chain by sharing sufficient information.

The UK buyers or companies can do contract farming with local big suppliers of agro products, for example, who can meet the standards for both sides’ win-win situation, he noted.

He said the local tariff is also high that might discourage local companies to take risks and follow stringent standards for exports which for the local market is not alike, he added.

Leather sector representatives in a recent meeting, however, identified a number of problems like absence of market-related information, British business culture, poor traceability, image crisis over Bangladesh’s capability to produce quality goods, issues related to bond licencing, import of chemicals, and shortage of skilled workers that are hindering the sector’s export growth.

Only a few companies have environmental certification that matches global standards, they said, adding that exporters can’t use local raw materials, especially crushed and finished leather, due to compliance issues.

They stressed on ensuring effective functionality of CETP and tannery estate at Savar and bringing more companies under the LGW (leather working group) – a global multi-stakeholder community committed to building a sustainable future with responsible leather.

In 2021, Bangladesh’s exports of leather goods and footwear to the UK were worth only $38 million, a minuscule fraction or only 0.7 per cent of UK’s overall imports of over $5.3 billion in the same year, according to data.

Asked about the fall in shrimp export to the UK market, Chairman and Chief Executive Officer at Seamark (BD) Limited Iqbal Ahmed attributed it to the drastic fall in shrimp production and the failure in introducing the small-sized and low-rated shrimp variety, namely vannamei, for the sluggish exports not only to the UK but also to the EU markets.

Source :thefinancialexpress.com.bd/ For More Details

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