Emerging countries struggle to grow EU market share of garment

Garment exporters in developing countries are being actively encouraged to seek European orders through various trade agreements, government policies and foreign assistance. But there is also frustration that successful export countries continue to enjoy preferential treatment.
Hundreds of garment exporters, most of them from Asia, were looking to pick up European orders at the semi-annual fair Apparel Sourcing fair in Paris earlier this year. More orders means more employment. Individual efforts are important, but it’s clear that the creation of new jobs is also to a high degree indebted to trade agreements, government policies and foreign assistance.
Perhaps not surprisingly, exhibitors originating from China and India were frustrated that successful export countries like Bangladesh and Pakistan continue to enjoy duty-free access to the EU market.
Emerging garment export countries benefit from the EU’s ‘Everything But Arms’ scheme, which gives 49 least developed countries (LDCs) duty-free and quota-free access to the European market. Among the Asian beneficiaries are Bangladesh, Cambodia and Myanmar, while the African countries Ethiopia, Madagascar and Lesotho also appear on the list.
Another EU special incentive is the Generalised System of Preferences Plus (GSP+) programme, offering zero-duty access to vulnerable countries that sign up a range of international conventions on human and labour rights, sustainable development, and good governance. Among the current beneficiaries are Pakistan, Sri Lanka and the Central Asian country Kyrgyzstan.
That’s not all. The EU can also tailor trade agreements to specific situations – as was the case when in April 2017 the European Union, the ILO (International Labour Organization) and the Jordanian Ministry of Labour signed a special project agreement. Under this agreement, the rules of origin were relaxed in order to help Jordanian companies export more to the EU under the condition that they employ a minimum number of Syrian refugee job seekers.
Assistance from USAID, CBI, ILO
Nearly all garment exports from the mountainous country Kyrgyzstan, sometimes called ‘the Switzerland of Central Asia,’ are traditionally destined for Russia, Kazakhstan and other Commonwealth of Independent States (CIS) countries.
But falling Russian garment demand in recent years has pushed Kyrgyzstan exporters to look for orders from Europe. In 2016, total Kyrgyzstan garment production was estimated at US$375m, while it reportedly exceeded US$1bn before the collapse of the Soviet Union.
Kyrgyzstan acquired EU GSP+ status from 1 January 2016. It would be logical to expect Kyrgyzstan garment exporters to be supported by EU, German or other European development aid organisations.
However, the Bishkek Garment Industry, a group of 15 Kyrgyzstan apparel firms, were exhibiting at the recent Apparel Sourcing fair in Paris with the support of the American Development Agency USAID. At its booth, experts from the consulting firm Deloitte explained to potential customers the professional CMT-services that Bishkek Garment Industry can offer.
The main comparative advantages of the Kyrgyzstan garment industry are its low labour cost, zero-duty access to the EU and Russia, the readiness to accept small orders and a relatively short transport time (10-12 days by truck to Western Europe; five days to Russia).
Kyrgyzstan, a small country of 6m people, reportedly has a large pool of textile and garment workers. Estimates vary from 150,000 to 300,000. Chinese and Turkish would-be investors eyeing the European and Russian markets are said to be showing interest.
Likewise, it wasn’t the Japan International Cooperation Agency (JICA) or another Asian development agency, but CBI from the Netherlands who took care of the promotion of eight garment companies from Myanmar.
All of them were locally owned CMT-companies wanting to develop FOB-exports. One of the exhibitors was U Myint Soe, the current chairman of the Myanmar Garment Manufacturers Association (MGMA), who argued an increase in the daily minimum wage from MMK3,600 (US$2.7) to MMK4,800 (US$3.6) was unacceptable. The MGMA had been demanding an increase up to 4,000 kyat/day (US$3.0).
Jordanian garment exporters also enjoy much international support. Jordan has free trade agreements with the US, EU, Turkey and Canada – and, from July 2016, manufacturing exporters in Jordan have benefited from duty-free access to the EU-market.
The EU agreement, offering relaxed rules of origin, requires that at least 15% of the export production lines be staffed with Syrian refugees. Today, 18 garment companies are using Syrian refugees.
Playing the sustainability card
Garment exporters from developing countries are well aware that European customers prefer manufacturing partners who not only excel in functional performance but also in social and ecological sustainability.
Enamul Kabir, CEO of Dhaka-based Ensa Clothing, argued that Bangladesh is doing better in social compliance than China and that seven of the ten ‘green’ garment companies in the world can be found in Bangladesh.
The group Velocity Apparelz Companies, headquartered in Dubai and owned by the Indian entrepreneur Sidarth Singa, started shipping garments from Mekele in Ethiopia in May 2017. The number of workers in Mekele will be increased from 1,200 in January 2017 to 2,500 by the end of this year.
And in early 2019, Velocity will launch a new 175 hectare industrial park in Mekele, the first private industrial park for textile, garment and related industries in Ethiopia. Sidarth Singa strongly believes that it makes sense to make only ‘green’ investments.
Migration is an issue in several garment exporting countries. By far most of the current 80,000 garment workers in Jordan hail from Bangladesh, Sri Lanka and Nepal – but some 20,000 more workers are needed and many of them will be Syrian refugees.
Nicolas Deverwerre, general manager of the Belgian lingerie manufacturer Astroline in Chisinau in Moldova, says it is very difficult to find new workers in Moldova.
Roughly 1m of the country’s 3.5m inhabitants are working abroad.
In December 2013, more than 120,000 undocumented migrants were forced out of Saudi-Arabia back to Ethiopia. So it is no wonder that the Ethiopian government has set high expectations for the successful take-off of the labour-intensive garment industry.
Dilara Begum, commercial counsellor of the Embassy of Bangladesh in Paris, predicts that part of the Bangladeshi garment industry will be a victim of climate change and that flooding will cause huge domestic migration.
And U Myint Soe, chairman of the garment manufacturers’ association MGMA, hopes that the Myanmar emigrants who are now working in Thai garment factories near the border of the two countries can be lured back to Myanmar by increased wages.

Source: Just-Style

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