Weak demand keeps RMG exports to Canada stagnant

Bangladesh's readymade garment (RMG) exports to Canada remained almost stagnant during the last couple of years, while Vietnam became the second largest apparel supplier to the North American country, surpassing Bangladesh.

Data from the International Trade Centre's (ITC) Trade Map shows Bangladesh shipped clothes worth $1.41 billion to Canada in 2024, which was $1.43 billion in 2023.

Garment exports to Canada reached $1.74 billion in 2022, when Vietnam surpassed Bangladesh with $1.75 billion in earnings.

Vietnam shipped $1.61 billion worth of apparel to Canada in 2024 and $1.53 billion in 2023.

China remained the top exporter to Canada, fetching $3.18 billion in 2024, down from $3.19 billion in 2023 and $3.77 billion in 2022.

Vietnam became the second largest exporter to Canada in 2022 mainly because of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The agreement allows Vietnamese goods duty-free access to the Canadian market.

Economists and exporters say Canada, where Bangladeshi shipments have the potential to increase, could also face stiff competition, especially in the new US tariff regime.

India, Vietnam, and Cambodia will enhance their focus on the Canadian market further, they say.

On the other hand, Bangladeshi apparel exports to Canada may suffer a setback as garments currently enjoying duty benefits are likely to face 17-19 per cent duty after graduating from the least developed country (LDC) status in November 2026, they add.

Faruque Hassan, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), says the Canadian currency's devaluation against the US dollar made imports costly for the North American country.

This resulted in sluggish demand, which made Bangladeshi garment export growth stagnant there, he says.

Though Canada is not a big market, Bangladesh has the potential to increase its market share there, Faruque adds.

He also says the government should provide policy support and alternative incentives, such as reduced bank interest rates, as well as funds for technology upgradation and machinery purchase, to offset the LDC graduation challenges.

SM Khaled, managing director of Snowtex Apparels, says exports to Canada are not increasing due to a number of factors, including the Covid-19 pandemic, the Russia-Ukraine war, and the latest US tariffs.

He says some shipments used to go to the US through Canada, and the process is now facing difficulties due to the US tariffs, while demand from Canada is not increasing either.

Shah Rayeed Chowdhury, a BGMEA director, says Bangladesh's reputation as a basic garment item producer and cheap hub is a major barrier to getting into Canada's premium apparel basket.

Though Bangladesh produces high value-added items, buyers source those from Cambodia, he says.

Rayeed, who exports garments to Canada, stresses the need to change the perception of buyers and grow their confidence by exchanging missions, as well as organising fairs and dialogues.

Terming Canada a stable market, he says despite the current tariff issues, Canadian buyers are placing orders in Bangladesh.

Dr Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), tells The Financial Express China's exports to Canada are falling, while Bangladesh became the third largest exporter there after Vietnam signed the CPTPP and achieved duty benefits.

He says Bangladesh could grab the shifting work orders from China, but this could be challenging mostly due to the new US tariffs.

Bangladesh may get a three-year transition period and enjoy duty benefits until 2029 after graduation, he also says.

"Bangladesh will come under significant pressure as India, after the high US tariff imposition, will try to increase its exports to Canada and even in the European Union (EU) and the UK.

"India has signed a free trade agreement (FTA) with the UK. Bangladesh should keep an eye on the EU, the UK, and Canada," he adds.

Munni_fe@yahoo.com