The current GSP Policy which requires a two-stage transformation for clothing export facilitated Bangladesh to build up and invest heavily into the backward linkage textile industry. As such a significant base has been built to support knit sub-sector to have almost 90-95% of the raw-materials from domestic source. On the other hand Primary Textile Sector (PTS) could provide 40% of the requirements of raw materials of the woven sub-sector. Investments made in the backward linkage industry are large investments and based on a particular condition. Therefore, any change in the existing Rules of Origin may have negative impact on this investment.

Preferential Trade Agreements such as GSP scheme are aimed at increasing reciprocal trade in goods and access to the community market for products from LDCs by eliminating customs duties. The new single across the board proposed value added criteria for determining the origin will definitely have profound negative impact on our PTS. The Rules of Origin could be formulated in a manner to improve the competitive position of the vulnerable LDCs like Bangladesh without negatively impacting the domestic PTS.

It is known to EC that Bangladesh as an LDC is struggling to sustain as well as expand the hascent PTS where Euro 4.00 bn investment is made to compete with matured textile sector of developing countries in the Post MFA. Simplification of R:0. by lower value added criteria will generate an economic shock in our PTS and investment so far made will be in jeopardy, leading to closure of mills and increase redundancy in employment, set backing poverty alleviation programme and discouraging potential investors and mills in the pipe line. Therefore we request the EC to continue the existing two stage transformation for determination of R.O.