The EU is proposing to give duty free access to all industrial products from Least Developed Countries (LDCs) where it can be shown that 30% of the items value has been added in the LDC. This would enable local garment manufactures to use imported cloth and yarn and still gain duty free access to the EU.

Bangladeshi garments should use locally produced cloth and yarn if they are to gain duty free access to the European Union, the country's textile mill owners urged, warning that lifting such a condition within the next five years would harm the sector.

The comments came at a meeting between the Bangladesh Textile Mills Association (BTMA) and EU officials at which changes to the present rules for duty free access to the EU were discussed.

The move is likely to be supported by garment manufactures, who believe it will free them of the need to rely on local cloth. However some are concerned that 30% is too high a figure for the value added content.

President of the Bangladesh Textile Mills Association (BTMA), Abdul Hai Sarker said the local textile sector would lose its competitiveness in the world market if the EU follows the proposed 30% value addition method. He said the advantage of the present duty free system, known as the Generalised System of Preference (GSP), was that it was well targeted at LDCs. A more general approach looking only at value added would allow developing countries to gain market share. Local investors are unlikely to invest the huge amount of money needed in the textile sector if the EU finalizes the proposed new GSP facility system.