The Impact of EU Trade Policies on Its Textile and Clothing Imports: A Comparison Between India, Bangladesh, China, and Vietnam

The European Union has implemented various trade policies in the textile and clothing sector, a major global employment generator, over the past three decades. This paper investigates how these evolving policies have impacted the four largest exporters of textiles and clothing to the EU. A notable trend emerges: India’s share of the EU market has declined and China has stagnated, while Bangladesh and Vietnam have seen significant gains. Using an Augmented Gravity Model, the study examines whether this shift is a result of broader global market dynamics or specific consequences of the EU’s tariffs, non-tariff measures, and its preferential trade agreement—the Everything But Arms initiative—with Bangladesh. Drawing on New Trade Theory, the research explores the interplay between these policies and their differential impact on developed (China), developing (India and Vietnam), and least-developed (Bangladesh) countries. It highlights the strategic role of NTMs and questions whether the EU’s focus on supporting least-developed countries might unintentionally undermine trade fairness for other nations within the global textile and clothing market. The paper contributes to the ongoing policy debate on strengthening the India–EU trade relationship, particularly in the context of current discussions around the India–EU Free Trade Agreement.