The debate over whether Bangladesh’s garment buying houses should be granted access to the European Union’s Registered Exporter (REX) system has triggered a sharp divide within the country’s export ecosystem. At the heart of the dispute is a fundamental question: who should rightfully hold the privilege of certifying the origin of goods exported to the EU under GSP rules?
The core of BGMEA’s opposition
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has strongly urged the Ministry of Commerce not to extend the REX facility to the Bangladesh Garment Buying House Association (BGBA). According to BGMEA, buying houses are intermediaries rather than direct exporters or producers. They do not own factories, invest in infrastructure, or directly employ workers in production.
In contrast, BGMEA and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) represent companies that have poured billions of dollars into factories, machinery, and compliance systems. For them, extending REX to agents could blur accountability and create a conflict of interest at a time when global buyers are scrutinizing traceability and compliance more closely than ever.
Risks highlighted by BGMEA
BGMEA President Mahmud Hasan Khan, in a recent letter to the Commerce Ministry, outlined several risks if BGBA were to obtain the REX facility:
· Conflict of Interest: Buying houses might gain leverage to certify goods without being involved in actual production, undermining the integrity of the certification process.
· Financial Risks: With no production responsibility, intermediaries could manipulate prices, creating opportunities for invoice mismatches, money laundering, and illicit financial transfers.
· Reputational Damage: Such practices could erode the trust of international buyers and even expose Bangladesh to stricter monitoring by bodies like the Financial Action Task Force (FATF).
Broader context: LDC graduation looms
The controversy is unfolding against the backdrop of Bangladesh’s upcoming graduation from Least Developed Country (LDC) status in 2026. Post-graduation, the country will need to secure access to the EU’s GSP+ scheme, which requires strict adherence to labor rights, environmental standards, intellectual property rules, and EU due diligence regulations.
The EU has already announced Digital Product Passports (DPP) and enhanced traceability requirements, meaning that any dilution of certification credibility could jeopardize Bangladesh’s ability to maintain preferential access to its largest export market.
BGBA’s counterargument
On the other side, BGBA argues that any exporter, manufacturer, trader, or re-consignor of originating goods in a GSP-beneficiary country has the right to apply for REX status. BGBA Vice President A.K.M. Saifur Rahman has stressed that buying houses should be able to submit documents proving the originating status of products when required by authorities.
From BGBA’s perspective, excluding them would unfairly limit the scope of businesses that facilitate exports, especially since many buying houses act as vital links between global retailers and local manufacturers.
What’s at stake
The dispute underscores the tension between producers and intermediaries in Bangladesh’s $47 billion RMG industry. While buying houses play a pivotal role in connecting suppliers with international buyers, granting those REX privileges without direct production responsibility raises legitimate concerns about accountability and compliance.
With global trade regulations becoming stricter and Bangladesh’s post-LDC export future hanging in the balance, the government faces a delicate task: balancing inclusivity in export facilitation with safeguarding the credibility, transparency, and compliance reputation of the country’s most vital sector.
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