Garments scam of millions of euros: European importers, Bangladesh exporters found to be guilty of complicity

The European Union investigators have unearthed a garments scam of millions of euros in which European importers and Bangladeshi exporters were complicit. According to EU's anti-fraud agency commonly known under its French abbreviation OLAF, (Office de Lutte Anti-Fraude), Bangladesh clothing origin certificates issued since 2005 showed "hundreds of thousands" were false - and in fact cargoes had come from China.
"The scale of the trouble was much larger than thought, involving hundreds of importers across most EU member states," said OLAF. The fraud was to help exporters evade EU import controls on Chinese goods re-imposed temporarily in 2005, after their abolition in 2004 had led to a surge in China clothing exports.
As a least-developed country, Bangladeshi exports get privileged duty-free access to EU markets, so customs authorities recovered around 30 million euros in duties due for goods actually made in China. The probe was sparked, said the report, when the reintroduction of China export quotas prompted a "sharp drop in EU imports from China but a corresponding spike in imports from Bangladesh," so that "the scale of the imports did not match the manufacturing capacity of the country."
The EU's import prices declined this year in a large number of clothing categories, reflecting the additional pressure from the European buyers. A series of countries were lowering their prices or offering cheaper products, like China, Bangladesh or Sri Lanka, while other origins had to raise their prices or shift to higher-end clothing, like Indonesia, India and Vietnam. In 2006-07 Bangladesh garments exports increased by 18.2 percent to reach $9.6 billion record level for the fifth consecutive year.
Bangladesh has an excellent opportunity to boost exports of garments to the US and EU countries where demand for low-cost apparel is increasing. The introduction of quotas restricting EU and the US imports from China in 2005 and 2006 respectively has already provided it with a breathing space in which to gain market share. So has the EU's Generalised System of Preferences (GSP) scheme, which provides garment manufacturers in Bangladesh duty-free access to the EU market - subject to certain conditions relating to the origin of the materials used in the manufacture of the garment.