Bangladesh exports to Europe are likely to increase, thereby it will offset the decline of exports to the US. It is possible that with the end of the MFA, eventually the textile and apparel industry in Bangladesh may get smaller. In the short run, it places a very high burden on the workers, said Howard Rosen, executive director of the Trade Adjustment Assistance Coalition (TAAC).

Rosen was expressing his views on post-MFA scenario from Washington DC to a group of journalists through a live webchat organised by the American Center in Dhaka yesterday.

Quota-free era offers Bangladesh an opportunity to move its workers into high productivity and high wage jobs. Bangladesh has a choice, they can try to win the low cost competition at the cost of its workers. The other choice is to begin moving up the value-added chain of production, he observed.

By producing higher value-added products more efficiently, Bangladesh apparel industry will be able to pay its workers more, he observed.

With the termination of the multi-fibre arrangement (MFA), there is going to be a tendency to favour the lowest cost producers. In that regard, China and India tend to be the lowest cost producers, he said.

"Bangladesh is also a low cost producer, so we can expect to see intensified competition between Bangladesh and the other low cost producers. We can clearly expect to see some increased competition from places like China and India in the short to medium term."

"Again, the challenge to Bangladesh is to acknowledge the new realities in the textile and apparel industry. And adopt policies to foster movement into more productive sectors. If Bangladesh is successful in making these adjustments, over the longer run this can make Bangladesh workers better off."

It is not clear whether competing against China and India on cost alone is a good strategy for Bangladesh. It might not be in a position to win that competition. Bangladesh needs to look forward, not backward, he felt.

Rosen noted large buyers do not always go to the cheapest producers. They tend to avoid purchasing all their supply from one producing country. So, it is true that US buyers have been expanding in certain markets.

"We can expect this trend to continue until we have a good idea of what the new trading regime in textile will be. It is very hard to know at this point what will happen beyond this year."

"We need to see how Europe and the US respond to the MFA removal. It is very possible that, in the short run, the domestic industries in these countries may press for some kind of protection."

"Immediately after expiration of the MFA, I don't expect any major changes to happen in the short term. Especially, since there are considerable lag-times in developing supplier relationships."

The MFA provided a false impression that competition was static. In fact, competition is always changing, the apparel expert said adding the textile and apparel industries in Bangladesh are certain to undergo change. But they, most likely, will not disappear.

Highly competitive environment, productivity is the key to success. Bangladesh should diversify its production into those things it can produce most efficiently, he said.

The old model of trade is to compete on the basis of cost and the new model is to compete on the basis of efficiency. Bangladesh should analyse its strengths and weaknesses and determine which industries it can be an efficient producer not the cheapest producer, he recommended.

Under a special agreement, the US can restrict some textile and apparel imports from China. "So, Bangladesh do have an opportunity to fill the gap between increased demand in the US and China's limits on exports to the US."

Trade and Investment Frame-work Agreement (TIFA) have proven to be an excellent way to enhance trade relations between two countries, Rosen said. "TIFA is a good way to begin harmonising policies. A TIFA can become the foundation for more far-reaching trade agreements," he said.

Rosen established TAAC to provided technical assistance and support to workers and communities experiencing pressures due to changes in international trade and investment. In 2001, he drafted the provisions in the Trade Act of 2002, which significantly reformed and expanded the US Trade Adjustment Assistance program.