Clothing exports' ranking a puzzle  

The piece of news that Vietnam had crossed Bangladesh and became the second largest clothing exporter globally in 2020 is not a surprising one. Though a section of readymade garments (RMG) manufactures and exporters and their allies are trying to present it as a setback of the country's leading export-oriented industry, this is not the reality.  

The ranking in the global clothing export market is derived from the World Trade Statistical Review 2021, released by the World Trade Organization (WTO) last week. This is one of the annual flagship publications of the WTO which presents the similar ranking over the years. It showed that Bangladesh became the second largest clothing exporters in 2010, notched up three steps from fifth position in 2009. At the same time, Vietnam advanced from sixth to fifth position. Since then, Bangladesh continued to be the second largest clothing exporter in the world until 2019.

But one needsalso to be circumspect regarding the ranking.  According to the WTO statistics, China is always the first in the global export of clothing followed by the European Union (EU). As the disaggregated or country-wise export data of the EU members are not presented in the publication, it is generally presumed that no EU country is in the second position.  Moreover, statistics available with EU sometimes showed that Italy is the leading clothing exporters among the union's member countries.

For instance, Italy's clothing export in 2018 stood at US$25.26 billion followed by Germany at $24.06 billion. In the same year, the value of clothing export from Bangladesh was $32.45 billion and it was $31.50 billion for Vietnam.

As WTO statistics didn't consider the country-wise data of EU members, it showed that EU is in the second position followed by Bangladesh, Vietnam, India and Turkey respectively. But clothing exports from India and Turkey were $16.61 billion and $15.66 billion in 2018 and well below the exports of Italy and Germany. In that case, Italy and Germany should be the fourth and fifth leading clothing exports and India and Turkey should be sixth and seventh respectively. 

Thus when Bangladesh or Vietnam is ranked as second leading clothing exporter in the world, technically the ranking is third as followed by China and EU. Moreover, WTO does not label it as an official ranking. It simply shows the top-10 exporters and importers of clothing and textiles. 

Nevertheless, the importance of the league lies on the branding of the clothing products in global market. By consistently holding the second (or technically third) position for a decade, Bangladesh has been able to demonstrate its strength in the RMG industry.  Such position also plays as an indirect rolein negotiating with the buyers. Again, the rank also creates some challenges to maintain the continued growth in the global market. For example, it may provoke the competitors to chase Bangladesh and expand their market shares.

The so-called global ranking is based on the market share of the exporting countries which is determined by the value of the annual exports. In 2020, Vietnam's share in global RMG exports stood at 6.40 per cent from 6.20 per cent in 2019. At the same time, share of Bangladesh dropped to 6.30 per cent from 6.80 per cent. The share of Bangladesh in the global clothing export market was 4.20 per cent in 2010 when the share of Vietnam was 2.90 per cent.

The time-series data also indicate that Vietnam consistently increases its share with a higher growth rate than Bangladesh.  In the last decade (2010-20), Bangladesh registered 7.0 per cent annual average growth in clothing exports when the rate was 11.0 per cent for Vietnam.

Unlike Bangladesh, Vietnam is not a Least-Developed Country (LDC) and did not enjoy any tariff-free or preferential market access to the EU. To expand the market for its goods, Vietnam had finally signed a bilateral free-trade agreement (BFTA) with the EU which came into effect in August last year. As a result, duty was lifted from 71 per cent of Vietnamese exports to the EU and 65 per cent of EU exports to Vietnam. Moreover, the tariffs on most top trading goods including RMG from both the partners will be gradually lifted after five to seven years. Thus, within  fiveyears, Vietnam will get entirely duty-free market-access to EU. The country has also joined Regional Comprehensive Economic Partnership (RCEP) deal, the China-centric mega-regional FTA. Thus, a large market is now also open for the East-Asian nation.

Moreover, Vietnam was one of the 12 partners of the United States (US)-centric mega-regional free trade agreement named Trans-Pacific Partnership (TPP). The country has to do hectic exercise to join the deal by agreeing to comply with many tough conditions.  Though Donald Trump, the former US president, scrapped the agreement, the preparation to join the deal will help Vietnam to sign a bilateral FTA with the US. Like Bangladesh, Vietnam also doesn't enjoy any tariff preference in the US market. Nevertheless, it is the second largest exporter of RMG in the US followed by China while Bangladesh is the third with almost half the export of Vietnam. The country is also trying hard to get preferential access to the market of the world's leading economy.

Finally, Vietnam pays reasonably better wages to the RMG workers. The minimum monthly wage of a RMG worker in Bangladesh is around $65, the rate is $151 in Vietnam. Over the years, Vietnam gradually adjusted the wages of the workers upwardly when in Bangladesh, workers have to demand and fight for tiny increase in wages. Most of them are also deprived of decent working and living condition and there is no minimum social insurance for the millions of workers. The factory owners and exporters are, however, continuously enjoying a number of fiscal and monetary benefits at the expanse of tax payers' money.

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