Global Value Chain and Trade Facilitation: The Case of Bangladesh Apparel Industry

Abstract

The study focuses on the apparel sector developments and trade facilitation performance of Bangladesh, and analyzes the dynamics and interplays in-between them. Presentations are based on both primary data, collected mainly from interviews of relevant public and private sector representatives in Bangladesh, and secondary data, compiled from different international and national trade databases and available literature. Starting off in the 1980s, Bangladesh quickly jumps up the apparel value chain (AVC) to be the biggest sourcing country worldwide only next to China. However, low entry barriers in the AVC, dependence on imported inputs, rise of the cut-throat competitors including the South-Asian and South-East Asian countries, constant increase in the labour prices, compliance concerns and dismal trade facilitation performance are offering the biggest challenges for the sector. The most challenging factor has been the time and cost of trading across borders, which is sometimes more than double than those of its competitors in Asia. The higher trading cost and time, faced by the businesses twice while importing inputs and exporting the finished goods, is neutralizing and eliminating the other comparative advantages Bangladesh has over its competitors. The study found that Bangladesh has potentials to drastically improve its trade facilitation performance which will significantly reduce its trading cost and time and enhance its competitiveness to maintain dominance in the global apparel market. The WTO Agreement on Trade Facilitation (ATF) 2013 offers both challenges and opportunities in this regard. If properly utilized, it may play a really important role in facilitating realization of the trade facilitation and apparel sector goals of Bangladesh.