WORLD TRADE
ORGANIZATIONWT/IFSC/W/8/Add.1
24 October 2001
(01-5213)
Integrated Framework Steering Committee
INTEGRATED FRAMEWORK PILOT SCHEME:
PROPOSAL FOR FOLLOW-UP TO THE IF ROUND TABLES
Addendum
Bangladesh
I. BACKGROUND
A. INTEGRATED FRAMEWORK ROUND TABLE
1. The Ministry of Commerce, Government of Bangladesh organised a Round Table Meeting
(RTM) on Trade Related Technical Assistance for Bangladesh under the Integrated Framework for
Trade Related Technical Assistance Initiative for Least Developed Countries in association with theMetropolitan Chamber of Commerce (MCCI) on 22nd January 2000.  The purpose of the meeting was
to discuss the multi-year programme (MYP) document prepared by Bangladesh for the RTM.  Both of
the inaugural and working sessions were participated by high level policy-makers, representatives of
development partners, senior officials from various government organisations, economists and leaders
of business community.  A multi-year programme including an inventory of possible trade relatedassistance projects was prepared in consultation with other Ministries of GOB and the private sector
trade bodies at the RTM.
2. The RTM served as an important means to seek consensus on trade-related issues in
Bangladesh and to sensitise Bangladesh’s development partners on the priorities for trade-related
technical assistance.  Consultations with bilateral and multilateral development partners continued
after the RTM.  Certain donors expressed interest in financing specific projects elaborated in the MYP
document.
3. The Government of Bangladesh considers trade development as an essential instrument for
growth and poverty reduction.  This view has alread y been expressed at several international fora such
as the previous Round Table meetings on the Integrated Framework as well as at the Third UN
Conference on the LDCs in May 2001.  The Bangladesh Export Development Project implemented by
the World Bank as well as a number of other projects being supported by bilateral donors in the areaof trade policy have already played an important role in “mainstreaming trade” in the national
development plans in the country.
B. S
TRATEGIC CONSIDERATIONS FOR THE MAINSTREAMING OF TRADE ISSUES
4. The strategic importance the Government of Bangladesh accords to trade is evident from the
priorities it has laid down in the Programme of Action 2001-2010 prepared for the Third UNConference on the LDCs.WT/IFSC/W/8/Add.1
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5. “The Programme of Action aims to consolidate the gains achieved during the previous decade
and contribute to a significant improvement in th e human conditions in Bangladesh during the present
decade.  In that pursuit, national policies will revolve around the following priorities:
- significant reduction in extreme poverty;
- developing human resources to support long-term development;
- achieving gender equality and empowerment of women;
- removing supply-side constraints to accelerate growth and employment generation;
- achieving competitiveness of domestic production;
- integrating with the globalized world economy;
- promoting good governance and social stability;
- reducing vulnerability and conserving the environment.
6. The 1990s has seen the most proactive phase of trade policy reforms.  Three  factors
contributed to this:
(i) A growing realization by the policy-makers about the limitations of the inward import-
substituting strategy and its negative implications for the economy in terms of productivity,allocative efficiency and export performance;
(ii) the pressure from donors to reform the trade regime, open up the economy and make a policy
commitment favouring export-oriented growth strategy;  and
(iii) emerging global market driven opportunities, in USA and Canada thanks to the MFA and in the
EU countries on account of preferential treatment under the EU GSP schemes.  Thus, the factorsthat accounted for the shift from an inward to an outward oriented trade policy was both
domestically induced and externally driven.
7. The major objectives of the country's current trade policy are:
(i) implementation of the export-led growth stra tegy through institution of export-augmenting
and export-promoting incentives;
(ii) removal of the remaining anti-export bias in the economy by harmonizing the tariff structure;
(iii) further rationalization of tariff structure;  and
(iv) promotion of export-oriented investment (both from domestic and foreign sources).
8. The main thrust of the Government of Bangladesh’s trade development agenda is based on
the premise that diversification and growth of th e production base will be sought mainly through
private initiative.  Public undertaking in production activities will be allowed where public sectorinvolvement is essential to facilitate the growth of the private sector and/or where there are overriding
social concerns to be accommodated.  The role of the government will be to facilitate private sector
led development through appropriate legal, institutional and policy framework and complementary
investments in institutional, physical and social infrastructure, information generation and
dissemination, R&D efforts for acquisition and adaptation of technology, skill formation and marketresearch to identify new trading opportunities conducive to niche product development.  Regular and
extensive private-public dialogue will be the basis of the interactive development process.WT/IFSC/W/8/Add.1
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C. RETAINING COMPETITIVENESS OF EXPORTS IN THE LEATHER SECTOR
9. The structural reforms initiated in the ea rly 90s’, embracing trade liberalization, open
investment policy, financial sector reforms and privatization have been among the main driving forces
of an export shift from agro-resource based products, mainly jute and tea, to labour-intensive
manufactured commodities.  The current export structure of Bangladesh reveals anyhow a ratherundiversified export basket, with just six commodities covering 95% of exports and the ready-made
garments (RMG) sector alone accounting for more than 75 % of the total of exported commodities.
The RMG sector will likely continue to remain the most important, but other sectors show high export
potential and need to be strengthened since the high concentration of exports in a single sector makes
Bangladesh’s export-led growth strategy highly vulnerable to external shocks. The removal of the
Multi-Fiber Agreement quotas in 2004 under the Urug uay Agreements on Textiles and Clothing will
result in Bangladesh loosing its preferential access and being compelled to compete on a more levelplaying field. Leather and leather goods rank high in Bangladesh’s exports, with about 170 million of
US$ in 1999, third only to RMG and jute products, but the export value  reflects only in minimal part
the potential inherent in the sector.  Asia (Near and Far East) is producing roughly about 40 percent of
the world’s leather and already dominates the world in the production of goat and sheep leather.  The
same region accounts for more than half of the world’s leather exports, more than half of the world’sfootwear production and f ootwear exports.  With Asia’s importance expected to grow further in the
future there are numerous possibilities for Bangladesh  to increase its, until now, modest share. The
export development of the leather sector will not only have repercussions on the balance of payment,
in the export diversification and earnings, but also on employment and poverty reduction, since the
leather sector employs a large number of people in the informal sector as well as families withextremely low incomes.  “Bangladesh must find employment for nearly 50 million workers during the
next 25 years.  Within a very few years, however, crop agriculture, the largest present employer, will
no longer be able to absorb additional labour. Therefore, the rapid development of industries, led by
manufacturing exports and spin-off employment in the service sector, must be the creator of most of
the jobs …economic growth, efficient, labour-int ensive and based on export-oriented production,
opens the broadest path toward industrial development and global competitiveness.”
1
10. Modern business requires efficient marketing.  With globalisation the importance of market
exploration is becoming increasingly important since major changes in market shares are expected to
take place in the aftermath of the signing of th e Uruguay Round.  Identifying accessing niche markets
is also expected to become critically important.  Bangladeshi entrepreneurs need to be sensitised to
these changes challenges and opportunities and should be adequately trained and imparted with the
necessary skills in order to adequately address the related issues.
11. The Round Table on the IF held in January 2000 reiterated Bangladesh’s large export
potential in the area of leather goods.  A number of project profiles submitted at the RTM related to
improvements in the leather sector in order to translate the existing comparative advantage into
competitive advantage.
D. ON-GOING TRADE -RELATED TECHNICAL ASSISTANCE ACTIVITIES
12. Bangladesh benefits from TRTA from a number of bilateral and multilateral donors.  A
comprehensive list of on-going TRTA programmes was presented in the RTM document of January
2000. The largest TRTA programme is by far the Bangladesh Export development Project implemented
by the World Bank. Other projects in the leather sector have been mentioned in the document. Some
others are mentioned in Annex 1.
                                                     
1 “Bangladesh 2020: A long-run perspective study”, World BankWT/IFSC/W/8/Add.1
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II. MARKETING SKILLS DEVELOPMENT SCHEME FOR THE LEATHER SECTOR
A. CONTEXT
13. In spite of the incentives and privileges accord ed to the sector, the country’s light leather
production from bovine animals of about 70 million sq. ft represents only about 2 percent of the total
Far East’s figure while the same figures for light leather from sheep and goat come to about 80million sq. ft or 4 percent of the production in the Far East.
14. Leather footwear production in Bangladesh varied from 5 to 6 million pairs yearly since 1990
and is only 0.25 percent of the total Far East figure.  The country also produces leather uppers.
Successful partnerships with companies, for instance, in Italy and Spain exist.  The production of
footwear components could be an interesting deve lopment. “The increasing globalization of world
commerce and industrial production make the country geographic position and energetic workforce
alluring dual assets to foreign firms looking for new manufacturing bases”.
2
15. The tanning industry is dominated by a handful of big tanneries, which rule the export scene.
The smaller tanners, many of which closed down during the last years, often do not have a big enough
production to be able to export full container loads of leather.  Bangladesh exports mainly semi-
finished leather (crust) since the exports of raw and wetblue hides and skins is forbidden.  Main
markets are Italy, Thailand, South Korea, Brazil, France and Germany.
16. The possibility to use imported chemicals, dyes, etc. etc. for the production of leather gives
the country an advantage on some of its rivals like for instance India.  The possibility to import tax-
free from Bangladesh in the European Union gives it another advantage over India.
17. Also as far as leather goods and garments are concerned, the country’s exports are taking off
and leave plenty of space for expansion.  Design is a particularly crucial issue in this regard.
18. A clear distinction needs to be made in assistance programmes to the tanning industry and the
leather products industry; the latter needs to be divided in footwear, leather goods and leather
garments.  Needs are not the same in all sectors and different approaches are likely.
B. CONSTRAINTS IN THE LEATHER SECTOR
19. The leather sector has been confronted with serious supply-side constraints, which have
hampered its export competitiveness.  These include:
- Poor quality of chemical processing in the leather sector;
- Inadequate search for ways to ensure best use of leather raw materials;
- Lack of capacity for product diversification;
- Inability to move up the value addition chain;
- Inability to grasp the ongoing rapid changes in the fashion and design, and customer
preferences of leather products;
- Inability to access quality product markets of the developed countries;
- Lack of skilled manpower;
- Inability to provide steady supply of trained manpower.
20. In particular, the leather sector needs to focus on the lack of production and market promotion
capacity, which includes typical problems such as:
                                                     
2 SameWT/IFSC/W/8/Add.1
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- Lack of analyses and studies on global market dynamics which would identify product
adaptation and market diversification opportunities;
- Inadequate identification of the modalities whereby support for market enhancement could be
provided;
- Inability to access information on export products;
- Enhancement of capacity to analyse trade related information;
- Lack of product development, diversification and quality control;
- Lack of training to disseminate information amongst entrepreneurs;
- Lack of training in modern production technology and quality control;
- Inadequate participation in international trade fairs, seminars and workshops to stimulate
entrepreneurial activities.
21. There is, therefore, a compelling need to diversify leather sector products, to enhance the
sector’s ability to move up the value addition chain through product upgrading, to increase access to
information related to potential quality markets,  to assure trained man-power in leather products
fashion and design, to improve quality processing of leather raw materials and enhance efficiency in
processing and to undertake R&D activities to stimulate search for ways to ensure best use ofparticular type of leather raw materials.
C. O
BJECTIVES :
(i) To raise awareness amongst leather sector entrepreneurs on global market opportunities,
customer preferences and global price dynamics and developments for raw hides and skins, semi-
finished and finished leather and finished leather products;
(ii) To train private sector entrepreneurs in the area of marketing of Bangladeshi leather and leather
products overseas, specially in the markets of E.U. and Asia.
D. BENEFICIARIES :
22. Export oriented leather enterprises (tanners and leather product manufacturers) in particular
and the Bangladesh export sector in general.
E. OUTPUTS /EXPECTED RESULTS :
(i) Analyses and studies on global market possibilities for Bangladesh’s hides and semi-finished
products, footwear, leather goods and leather garment manufactures.
(ii) Awareness of Bangladeshi entrepreneurs as regards challenges and opportunities in marketing of
leather and the leather products raised;
(iii) Leather sector entrepreneurs trained in identification of potential marketing channels of leather
and leather products;
(iv) Technical skills developed in design, quality management, application of advanced
production technology, marketing management and promotion;
(v) Access to information enhanced and capacity to analyse trade-related information improved;
(vi) Promotional materials developed and potential partners identified;
(vii) International trade fair participation, marketing missions, seminars and workshops to
stimulate entrepreneurial activities organized;
(viii) International partnerships established for Bangladeshi entrepreneurs (e.g. joint ventures
agreement).
F. COORDINATION ASPECTS :
23. Activities need to be coordinated with other ongoing efforts in the sector trough existing
incentives and projects by the Government and other organizations to avoid duplication and increaseWT/IFSC/W/8/Add.1
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yield. In particular, synergies will have to be established with the World Bank’s programme for
Export Diversification to ensure full complement arity. The UNIDO environment-related activities,
especially the tanneries’ effluent treatment project, need to be brought into the picture, due to the
possible impact on environment of the development of the leather industry.
G. PROPOSED ACTIVITIES
(a) Diagnostic Studies
1. Undertake diagnostic studies in the fields of leather, footwear, leather goods and leather
garments to assess production and export constraints in the specific sectors with the emphasis on
export marketing.
2. Discuss findings of diagnostic studies at national symposia for each individual sub-sector.
3. Prepare a comprehensive implementation plan and schedule of activities with detailed costing
for activities B and C.
24. It is proposed that these studies be carried out immediately.  Apart from the constraints
analysis, they will provide, inter alia , an analysis of Bangladesh’s competitiveness in the sector vis-à-
vis its closest competitors, especially in the Asian region.  These studies will also result in the
preparation of a detailed implementation plan for activities envisaged under Modules B and C e.g.trade fairs to be targeted, selection of enterprises for trade fair participation, assessment of training
needs, number of persons to be trained, content of training programmes, trade information and market
intelligence gaps etc.
(b) Capacity Building and Access to Market Related Information
1. Organize seminars to address the problems encountered for the different sectors.
2. Carry out training programmes for each one of the different sub-sectors including one or more
of the following subjects: design, collection building, production technology, product adaptation,
commercial management, export marketing, trade fair participation, the use of Internet.  The decision
on the number of programmes and the type of training courses will be finalised only after the
completion of the diagnostic studies.3. Disseminate market intelligence amongst businessmen through distribution of relevant
information and publications, participation in the Market News Service etc.
(c) Contact Promotion
1. Facilitate participation of Bangladeshi enterprises in selected trade fairs (Europe, Asia, North
and South America).
2. Develop networks with overseas buyers through various activities through exchange of
delegations and electronic networking.
3. Assist in the search for joint venture partners, as already successfully exists in the various
sectors, e.g. through participation of enterprises in business partnering programmes.
(d) National Focal Point:
25. Ministry of Commerce. The coordination of the project activities as well as of other on-going
trade-related TA with the proposed project will be ensured by the Ministry of Commerce.
(e) Location of project:
− Ministry of Industries.WT/IFSC/W/8/Add.1
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(f) National Counterpart Institutions:
- Bangladesh Export Promotion Bureau;
- Bangladesh Finished Leather Exporters Association;
- Bangladesh Leather Export Traders Association;
- Bangladesh Tanners’ Association and other industry related association in the finished leather
products sector;
(g) Budget
26. See belowWT/IFSC/W/8/Add.1
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B.L. Description Total (4 months) (8 months) (6 months)
W/m US$ W/m US$ W/m US$ W/m US$
11.51 International consultant 8 121,000 2 31,000 6 90,000
15.01 Personnel travel 11,000 4,000 1,000 6,000
16.01 Agency travel 5,000 5,000
17.01 National project coordinator 18 36,000 4 8,000 8 16,000 6 12,000
17.02 National consultants 8 12,000 4 6,000 4 6,000
21.01 Subcontract 20,000 20,000
32.01 Group training 15,000 5,000 10,000
33.01 In-service training 28,000 28,000
41.01 Expendable equipment 14,000 8,000 6,000
53.01 Sundry 2,534 535 1,272 727
Subtotal 31 264,534 9 54,535 18 127,272 12 82,727
56.01 Support costs 26,466 5,465 12,728 8,273
Total 31 291,000 9 60,000 18 140,000 12 91,000
A – DIAGNOSTIC STUDIES
B – CAPACITY BUILDING AND ACCESS TO MARKET-RELATED INFORMATION
C – Contact promotionWT/IFSC/W/8/Add.1
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ANNEX I
On-Going Trade Related Technical Assistance Programmes
Donor Title Objective Budget
SWEDENTrade
Promotion
ServicesAssistance in
Developing
CountriesSupport at the enterprise level
including access to business
information, use of informationtechnology, adaptation/development
of new products, advice on standards,
packaging, quality control, marketing
and distribution channels;
commercial representationAgreed amount 13,4 MSEK.
This project applies to all
five RTM countries
Monitoringthe impactsof WTOTo strengthen the capacity of
Bangladesh to address trade policyreform  by building capacity for
independent economic analysis and
promoting dialogue on trade issues
between government, civil society
and the private sectorProject ongoing
Monitoring
the impact ofthe Uruguay
RoundTo improve the trade policy
analytical capacity in Bangladesh; toprovide strategic advice, training and
analysis in the area of WTO
implementation issues and emerging
multilateral and regional trade issuesProject ongoing
Legal
ReformTo support the development of a
rules-based, effective, transparent,
predictable legal framework in
BangladeshThe project plannedCANADA
Support for
the jute
industry- training
- presentation of new designs
- participation in trade fair in
Europe
- transfer of used production
equipmentAgreed amount
 15 MNOKWT/IFSC/W/8/Add.1
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ANNEX II
INTEGRATED FRAMEWORK TRUST FUND (IFTF)
Pilot phase
Project Number: ……………………..
Project Title : Marketing skills development scheme for the Leather Sector
Estimated start date : November 2001
Duration: 18 months
Project Site: Dhaka, Bangladesh
Sector: Trade Development
Government Cooperating Agents:
Ministry of Commerce
Ministry of Industries
Bangladesh Export Promotion Bureau
Executing Agency : International Trade Centre UNCTAD/WTO (ITC)
__________________________________________________________________________________
Brief Description :  The project aims at raising awareness amongst the leather sector entrepreneurs on global
market opportunities and at building their capacity in international marketing, product design and quality
management.  Improved access to trade information and market intelligence as well as developed promotional
skills and tools will allow entrepreneurs to establish contacts with business partners in international markets.  As
a result, the project will contribute to the export development of the leather sector.  Special attention inimplementation will be given to ensure that project's activities will take into account the likely impact on thepoor.
__________________________________________________________________________________
On behalf of:  Government of Bangladesh
____________________________________________________ Date: ________________
United Nations Development Programme
____________________________________________________ Date: ________________
International Trade Centre UNCTAD/WTO
____________________________________________________ Date: ________________
__________Contributions
IFTF
($US)
2001 : $   20 000
2002 : 200 000
2003 :   71 000
________
TOTAL : $ 291 000
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