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New EU rules likely to promote RMG exports from Bangladesh
Nov '10
Europe's relaxed rules, which are meant for the least developed countries (LCDs), under generalized system of preferences (GSP) in case of textile trade, are likely to promote the garment exports from Bangladesh.

The new rules of origin (RoO), which have been accepted by the European Union is expected to be implemented from 1st January.

One of the major changes that is likely to be permitted in case of several RMG units is that, they can go for single-stage processing or manufacturing readymade garments directly from fabric in place of the two-stage processing, where the manufacturing starts from the yarn stage and passes through the fabric stage to reach the ultimate product.

Most of the garment items, exported from LDCs, are likely to enjoy duty-free access to the European Union. It is not going to take into consideration the place of origin of the raw materials. Usually, the duty imposed for readymade apparels is 12 percent in the European Union.

The generalized system of preferences is a trade agreement which permits low or zero duty on imports from developing nations. The rules of origin find out whether the imported products are originally derived from the countries covered under GSP or not.

Once the new rules of origin are enforced, the exporters, using the imported fabrics for producing readymade garments in Bangladesh and then exporting them to the European Union, are likely to avail the GSP benefits.

A large number of woven apparel exporters import the required fabric from China as the backward linkage sector is not as dominant as the knitwear sector. The backward linkage sector within the country is expected to confront some competition as many producers of readymade garments import the fabrics from countries like China.

Fibre2fashion News Desk-India

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