Bangladesh and Türkiye have recently agreed to deepen economic cooperation and initiated exploratory talks for a Free Trade Agreement (FTA) or Preferential Trade Agreement (PTA). This news has sent ripples through the global textile supply chain, as two regional textile powerhouses come together to potentially reshape the export corridor from South Asia to Eurasia.
Background
Bangladesh is the world's second-largest garment exporter, with annual exports exceeding $45 billion, of which apparel accounts for over 80%. Türkiye, the third-largest textile supplier to Europe, has an annual textile output of around $30 billion and enjoys zero-tariff access to the EU through its Customs Union agreement. Current bilateral trade is modest, totaling only about $1.4 billion in 2022, with textiles making up less than 30%.
The impetus for these talks stems from a perceived trade imbalance. Türkiye exports mainly machinery and chemicals to Bangladesh, while Bangladesh exports primarily garments and textiles to Türkiye. An FTA would significantly reduce tariffs on Bangladeshi apparel entering Türkiye and could give Turkish yarn and fabric a cost advantage in Bangladesh.
Industry Impact
For Bangladesh, the direct size of the Turkish market is limited compared to the EU or US, but its strategic value lies in re-export potential. Türkiye has FTAs or preferential arrangements with the EU, the Middle East, and North Africa. Bangladeshi products processed or assembled in Türkiye could enter these markets at lower rules-of-origin thresholds, prompting Bangladeshi factories to reassess their sourcing strategies and potentially set up finishing or cutting units in Türkiye.
Türkiye faces both opportunity and pressure. Its textile industry has long struggled with high production costs—minimum wages are about five times those in Bangladesh, and energy costs are nearly double. Importing low-cost fabrics and garments from Bangladesh may force Turkish firms to shift toward higher-value segments like technical textiles and branding. In the short term, however, Turkish spinners and weavers will face stiffer price competition.
For global buyers, this development offers a potential risk-mitigation route. The EU currently grants Bangladesh zero-tariff access under the Everything But Arms scheme, but if policies change, transshipment via Türkiye could provide a buffer. Moreover, a Bangladesh-Türkiye combination can meet the dual demand for "nearshoring + low cost"—Türkiye's quick response capability paired with Bangladesh's scale and price advantage.