Bangladesh Laos Nepal and Cambodia key beneficiaries as EU announces January start date for new Rules of Origin

 On January 1, EU countries will implement new Rules of Origin which make it substantially easier for countries like Cambodia, Bangladesh and Laos to make full use of their duty-free concessions for clothing.

The rules, at the time provisional, were published in August, with no commitment to an implementation date. But in mid-November, the UK Customs authority published a new Notice to Importers, announcing the new Rules will begin to affect all imports into the EU from January 2011, though some detailed aspects will be introduced progressively between then and 2018

The key rule change affecting the apparel and garment industries is that most apparel imports from all Least Developed Countries (LDCs), including Bangladesh, Cambodia, Laos and Nepal, are now eligible for duty-free access wherever their raw materials originate from. Previously, the only LDCs with such privileges were those in Africa, Latin America and the South Pacific that had signed Economic Partnership Agreements with the EU. Since these had limited manufacturing capacity, there had been limited take-up of the concession.

This change in practice is particularly important in allowing Bangladesh, Laos and Cambodia to use woven fabric from China in garments, and to import yarn from China to knit up into garments. The change does, however, seriously threaten Bangladeshi spinners at a time they already believe they are being hurt by the world cotton problems. It is not clear whether they have yet latched on to the imminence or seriousness of the problem - and we suspect there is a real risk the Bangladesh government might put obstacles in the way of importing Chinese yarn.

The issue is less serious in Cambodia and Laos, and for woven fabric: no Asian LDC has any significant commercial weaving capacity.

The EU 2011 Rules of Origin full rules are available here and an analysis will be included in the 2011 Edition of the Clothesource Guide to Apparel Trade Regulations, due for publication December 1