Policy Paper Series
From Compliance to Competitiveness: The Growing Importance of Labour Issues for Bangladeshi Exporters in the European Union and the United States
Citation: Raihan, S. (2026). From Compliance to Competitiveness: The Growing Importance of Labour Issues for Bangladeshi Exporters in the European Union and the United States. SANEM & Australian High Commission Policy Paper Series. SANEM Publications, Dhaka, Bangladesh.
Bangladesh’s ready-made garment (RMG) industry has become the world’s second-largest apparel exporter. Its growth rested on low labour costs, a large workforce, and preferential access to the European Union, while the United States developed into its largest single-country market. That model is now under pressure. The EU has moved from mainly voluntary corporate responsibility to binding rules on due diligence, sustainability reporting, and forced labour, although the 2025-26 Omnibus reform narrowed the reach of some measures. The United States relies more heavily on buyer codes and customs enforcement, especially against goods linked to forced labour. At the same time, Bangladesh’s graduation from Least Developed Country (LDC) status will gradually reduce the tariff preferences that helped offset weaknesses in productivity and compliance.
This article argues that labour standards are no longer a peripheral ethical issue. They now influence market access, buyer selection, shipment clearance, and export competitiveness. It reviews the evolution of labour governance in Bangladesh, explains the different regulatory approaches of the EU and the United States, and examines the costs and opportunities facing exporters. The main challenge is distributional: large factories are better placed to absorb new compliance costs, while smaller firms and subcontractors risk exclusion. A durable transition will therefore require stronger public enforcement, practical support for smaller exporters, shared industry systems, and closer coordination with development partners
