Bangladesh Beyond 2005: The Era of Textile and Apparel Quota Phase-Out

Background and Problem Discussion: Removal of quotas on Textile and Apparel trade since 1st January 2005 is a part of the globalization process. Small countries like Bangladesh had their RMG industry grow as a result of this protection provided by the quota regimes. With the growth of the industry and the removal of quotas both the issues impinge on the survival of small countries like Bangladesh in the competitive world.

Purpose: It is to discover how the quota regime was effective and what impact will its removal have on the economy and exports of Bangladesh. The steps have been taken to counter any negative affects of this and the ongoing situation. Bangladesh here is taken as a test case for many such developing countries in the world.

Method: Empiric, qualitative, descriptive, Interview and deductive method.

Theory: The underlying theory of globalization is understood in this thesis in overall. With the better accommodation of world demand with the world supply is met up, which a win-win situation for both the suppliers and consumers would come across. Thus, Bangladesh is taken as an example where restrictive trade environment that protected the RMG industry is exemplified.

Analysis: With the secondary source, have used the limited open source data information from the Internet and the published reports to establish the present scenario of the quota regime. Further on, we explored in the industry for perceptions by experts on the quota regime through the interviews the impact they had and the changes they underwent to brace for the quota free era for survival.

Conclusion: The predicted scenario given by many studies, talks of a million lost jobs and a great loss in market shares for Bangladesh has been refuted and the abolishment has in some areas even improved Bangladesh’s situation on the newly opened global market. Though the transition to a fully competitive trade is not over yet; as a result this study should be viewed more of a transitory one. Until now Bangladesh has shown good export growths; 2005 its RMG exports grew by 18.61% and for the first three months of 2006 it held to previous year’s growth.

Author: Ahamed Abbas Mohamed Reznideen & Mohammed Emran Atcha

Source: Blekinge Institute of Technology

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Chapter 1 Introduction
1.1 Background of the study
Chapter 2 Methodology
2.1 Purpose of the study
2.2 Research questions
2.3. General method of study
2.3.1 Literature review
2.3.2 Primary data
2.4 Primary data collection
2.5 Interview methods
2.6. Identification of terms
2.7. Limitations
Chapter 3 Theory
3.1 Globalization and the free trade
3.1.1 Existing arguments for the free trade
3.1.2 Existing arguments against the free trade
3.2 Overview on the history of the world trade
3.3 The general agreement on tariffs and trade (GATT) and the World Trade Organization (WTO)
3.3.1 The Multifibre arrangement (MFA) 1974 – 1994
3.3.2 The agreement on textile and clothing (ATC) from 1995 – 2004
3.3.3 The integration of textile and clothing products into the GATT rules
3.4. Quota implementation
Chapter 4 Uncertainties of the Quota
4.1 Uncertainty No 1: The ATC and post ATC issues affecting the trade flows.
4.2 Uncertainty No 2: The erosion of preferential market access for the developing countries
4.3 Uncertainty No 3: The use of trade remedies under the WTO agreement
4.4 Uncertainty No 4: The introduction of new rules / new buyer requirements
Chapter 5 Bangladesh textile industry and the markets
5.1 Bangladeshi export market in brief
5.1.1 The US market
5.1.2 The EU market
5.2 The market change and the removal of quotas.
5.3 Constraints in domestic supply
5.3.1 Structural rigidities
5.3.2 Policy induced constraints
5.3.3 Privileges enjoyed by the RMG sector
Chapter 6 Literature on Removal of Quota
6.1 Effects on the quota removal
6.2 Quota elimination impacts
6.3 Problems in Bangladesh beyond the quotas
6.4 Export figures after the quota phase out
Chapter 7 Findings & Analysis
7.1 Analysis of the questions
7.2 Responses from various Professionals in the Apparel / Textile industry
7.3 Analysis of responses
7.4 Summary of the Responses
7.5 The Research Questions
Chapter 8 Conclusions
8.1 Remarks & Prospects for further studies
Appendix: GTAP Model

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