Bangladesh’s denim products exports to the United States of America rose by 5.42% to $573.27 million during the January-August period of 2019, thanks to the US-China trade war.
However, exporters are not happy as competitors outperformed Bangladesh.
As the second-largest exporter of apparel goods, Bangladesh was supposed to gain more from trade conflicts in capturing market share of denim products, but its close competitors—Vietnam and Pakistan gained the highest.
According to the US Office of Textiles and Apparel (OTEXA), Bangladesh’s denim exports to the US market saw a 5.42% rise and the amount was $544 million during the same period of 2018.
Meanwhile, US total imports of denim products from world markets recorded a 4.55% growth to $3.9 billion during the January-August period of the current year, which was $3.73 billion.
Vietnam has gained the most from the US-China trade war because of its preparedness in reviving business from the trade redirections.
Vietnam, a close competitor of Bangladesh in the US market earned $346.27 million exporting denim products, up by 34.43%, which was $256 million during January-August of 2018.
Pakistan earned $262 million, which was 14.20% higher compared to $229.31 million in the same period a year ago.
“Most of China’s trade is shifting to Vietnam and Cambodia as the US retailers and investors feel comfort due to shorter led time and better business enlivenment.”
Mexico, the second-largest exporter of denim goods, has seen an 8.80% increase in export from $$793.22 million to $863 million.
Since the trade friction cast shadow on bilateral trade with the US, China, the number one exporter of denim products to the global markets, saw a 6.93% fall to $856.19 million, which was $920 million in the same period a year ago.
“Bangladesh’s denim products exports to the US markets performed better due to the US-China trade war. But Bangladesh has been able to capture a very few from the trade conflicts, while its competitors such as Vietnam and Cambodia reaped the most benefits,” said Sharif Zahir, Managing Director of Ananta Denim Technology Ltd.
Most of China’s trade is shifting to Vietnam and Cambodia as the US retailers and investors feel comfort due to shorter led time and better business enlivenment, said Zahir, also a Director of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Buyers are not willing to come here as the ease of doing business is still lower comparing to other competing countries, which is undermining the opportunity. Though, Bangladesh saw an eight-point jump in ease of doing business in the latest ranking but not enough to attract them, elaborated Zahir.
In reaping the most benefits from the trade tension, experts and manufacturers have put emphasis on trade liberalization, attracting FDI product diversification and making exchange rate completive.
“Vietnam and Pakistan gain as they have devalued the currencies, while the appreciation of Taka against US dollar is eating up Bangladesh’s competitiveness in the global markets,” said Zahid Hussain, a consultant in World Bank Dhaka.
As an immediate measure, he suggested to make the exchange rate completive, while removing regulatory complexity in making the business more convenient with less time, said Zahid.
On top of that, from the trade conflict, Vietnam has gained the most because of its readiness to welcome the redirected trade and they have a diversified products basket and received a large amount of FDI relocated from China, said the economist.
Bangladesh has to offer better incentives such as quicker services by bringing regulatory reforms to attract FDI and improve infrastructure to cut time in shipment, he added.
In 2018, when the trade conflict began, the maximum tariff rate considered by the US government was 25%. Now, the US is levying 30% tariffs on some products on 15 October, where apparel items added creating more opportunities for Bangladesh.
