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Reforms in export-import regulations key to end one-sided dominant trade deals

With the outbreak of the COVID-19 pandemic, the cancellation of work orders by the global retailers was common to most Bangladeshi apparel suppliers. Holding or canceling a work order on progress left the apparel exporters in severe crisis as they faced cash shortages to pay workers as well as raw materials dues. The cancellation of work orders raised questions about the ethical standards or ethical buying practices of brands and retailers.

However, in the case of cotton or raw material imports, Bangladesh’s apparel and textile sector people did not do so in this regard. This is because of one-sided dominant trade deals.

Reform-Bangladesh-export-import-regulations
Figure: It is high time to take necessary steps in the supply chain, which will protect suppliers’ rights as well as workers.

Apparel exporters fall victim to the COVID-19 pandemic as the trade deals in exporting goods are dominated by buyers, where the exporters don’t have control over the one-sided decision of canceling the work orders. To sustain their businesses through the Coronavirus pandemic and address the impacts of work order cancellation, apparel exporters need a balanced trade deal to create a win-win situation.

“As a cotton importing country, we are cordially treated and have importance to the cotton-producing countries,” Mohammad Ali Khokon President, BTMA told Textile Today.

Those countries approached with an aim of selling and they searched for customers here. As an export destination, they give importance to Bangladesh, said Khokon.

“But, in case of rules and regulation regarding export-import contacts, we are highly dominated by them.”

To buy cotton or other raw materials or to sell apparel goods to the brands and retailers trade deals are controlled by their rules. It always gives protection to them, where we are the victim, said the trade leader.

Even being an importer of cotton and raw materials, Bangladesh does not have control over the trade deals. If a buyer does not get apparel products delivered in time, we have to send it through air shipment, M A Khokon explained.

But in the case of cotton import, we have to give a Letter of Credit (LC) amendment in case of failure of purchasing cotton from them. Both imports and exports are dominated by the rules of foreign countries, said M A Khokon. “It is the harsh reality; we are being dominated in selling apparel goods to brands and buyers, while in importing cotton and raw materials buying goods. As we have no supply of cotton from the domestic source, they are taking the benefits,” Abdus Salam Murshedy, Managing Director of Envoy Textile.

As the success of the business depends on both sides’ sustainability, we should think about more bilateral relations with the cotton importing country, said Salam.

While for the sake of a sustainable apparel supply chain, the cotton exporting countries should think about the importer’s rights so that both parties can create harmonized trade deals for a better future, said Salam, also President of the Exporters Association of Bangladesh (EAB).

During the COVID-19 pandemic, buyer’s dominance was more prominent as they canceled orders and later demanded discounts due to the lack of a proper system. In the given context, there should be a reform in trade deals which will protect the supplier’s rights.

“We have already experienced difficulties due to the buyers-driven trade deals during the COVID-19 pandemic as they canceled work orders and unethically demanded discounts on finished goods,” Fazlee Shamim Ehsan, a Director of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) told the Textile Today.

It is high time to take necessary steps in the supply chain, which will protect suppliers’ rights as well as workers, said Shamim. Brands, retailers and suppliers should work together to devise ways based on both sides’ status to go through this difficult time and pave ways to recovery, he added. In this regard, there is no alternative to collaboration, which has been excellent with all customers in understanding constraints and ways forwards.

Meanwhile, others called for a true partnership for the sustainability of the apparel supply chain.

“As we all are going through a crucial time, a true partnership is the key to overcome. While to come out from the unethical purchasing practice, partnership and trust between the clients and the manufacturers are vital,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan told the Textile Today.

I think there is a strong need for a system whereby buyers will be more responsible to protect suppliers’ rights. In addition, the system will have a legal framework to make buyers and brands responsible in case of any order cancellation or payment disputes if any, said the business leader.

From our part as an association, we will work with buyers so that a new model can be established for both sides to make the supply chain sustainable, he added. Meanwhile, economists and trade analysts also urged global buyers to be more responsible to honor contacts in any situation.

“Ethical practice to honor trade deals in the global apparel supply chain came under question following the work order cancellation by the brands and retailers,” Khondaker Golam Moazzem, Research Director at Centre for Policy Dialogue (CPD) told the Textile Today.

For the sake of the business, the buyers should follow the ethical practice and the trade contacts need reforms to ensure equal treatment for retailers and suppliers, said the economist.

He also urged the respective importing countries to look into the matter so that the supplying countries do not fall victim due to lax regulation, which favors only the importers. As per estimation of the BGMEA, global retailers canceled or put on hold work orders worth $3.17 billion during the first wave of the COVID-19 pandemic.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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