EU-Vietnam FTA Threatens Bangladesh’s RMG Exports
Bangladesh’s RMG exports to the EU could decline by 21% due to the EU-Vietnam Free Trade Agreement (FTA) and Bangladesh’s LDC graduation, a study by RAPID and Friedrich-Ebert Stiftung revealed.
The report highlights that Bangladesh’s overall exports to the EU may drop by 21% as it loses duty-free access under the Everything But Arms (EBA) programme, facing up to 12% duty post-2029. Meanwhile, Vietnam is set to enjoy zero-duty access by 2027, backed by robust investments in backward linkages and streamlined trade policies.
Bangladesh lags in backward integration and policy implementation, making it vulnerable to losing competitiveness. The study recommends negotiating extended LDC transition periods with the EU, relaxing GSP+ rules of origin, and pursuing FTAs to sustain market access.
Sustainability and compliance with EU carbon and labour standards are critical, the report noted. Investments in man-made fibres, recycling and trade infrastructure are essential to enhance competitiveness.
While FTA negotiations with Japan and Singapore are underway, experts emphasize diversifying exports and addressing structural challenges to sustain growth. Labour shortages in China and Vietnam may divert orders to Bangladesh, but unresolved issues like energy supply and banking inefficiencies hinder progress.
The study highlights that adopting timely policies and aligning with global sustainability standards will be vital for Bangladesh to remain a competitive export hub.
