The European Union (EU) has deferred enforcement of its relaxed rules, known as Generalised System of Preferences (GSP), for products entering its market from the least developed countries (LDCs).
The move has come following the stance taken by some LDC governments in favour of a more cautious policy to "safeguard" the interest of their local textile industries, sources close to the EU said.
The new GSP that allows imports of everything but arms in to the EU from the 49 LDCs, was due to come into force from July this year.
"We have objected to one stage transformation, which intends to allow Bangladesh's exporters to import fabrics to produce apparels for exporting to the EU market," said MA Awal, chairman of Bangladesh Textiles Mills Association (BTMA).
He said he had argued with the EU that a simple Rules of Origin (RoO), meaning the import of fabrics from South Asian Association for Regional Cooperation (SAARC) or Association of South East Asian Nations (ASEAN) countries might affect the local textile industries in Bangladesh.
"The import of fabrics from other countries will not help our textile industries to flourish. And, therefore, it will not serve the purpose of the GSP to help the LDCs to alleviate poverty and achieve sustainable development," Awal said.
In some cases, private sector exporters and public sector textile mills have taken conflict ing stands. The apparel exporters want import of fabrics from the SAARC and ASEAN region but the BTMA does not want that.
Through its GSP, the EU extends preferential access of the products of the developing countries to its market. The EU has the most generous GSP system among the developed countries. In 2003 EU imports under GSP totalled in value terms euro 52 billion. Under the EU GSP, developing countries share in total EU imports grew from 33 per cent to 40 per cent between 1999 and 2000.
As part of a wider review of its RoO, the EU is in the process of reforming it. The RoO governs the GSP eligibility. The objective is to simplify and, where appropriate, relax these rules to provide further access for the developing countries.
The new GSP will remain unchanged until the end of 2008 for providing stability and predictability for importers and exporters. At the end of this period, the allocation of preferences will be reviewed to better meet the evolving development needs of each LDC.
Currently, Bangladesh receives the GSP facilities for its apparel products and that the country is allowed a two-stage transformations -- yarn to fabrics and fabrics to outfit -- to qualify the scheme.
"The EU has rescheduled the enforcement of the new GSP from next January. They are studying various sides of the proposed GSP reforms," said an official at the Office of the European Commission Delegation in Dhaka.