Workers at a factory in Gazipur inspect goods before shipment. Photo: Amran HossainThe export of garment items to the US market is increasing because of high demand, despite heavy duties levied on the products.
Bangladesh, although a least developed country (LDC), has to export goods to the US by paying high duties, like the developed countries.
Bangladesh, along with other LDC members, has been fighting for a duty-free, quota-free entry to the US market.
The US government agreed to grant a 97 percent duty-free facility to the LDCs at the Hong Kong Ministerial meeting of World Trade Organisation (WTO) in 2005.
But major export items, like garments, leather goods and footwear, were not included in the list.
As a result, the country has been doing business with the US by paying 17 percent duty on average and the highest duty of 32 percent on manmade fibre cloth, industry insiders said.
In fiscal 2010-11, Bangladesh exported knitwear items worth $1.12 billion and woven garment items worth $3.50 billion to the US, according to data from state-owned Export Promotion Bureau (EPB).
In 2010, Bangladesh paid $630 million to export goods to the US, the data showed.
In fiscal 2009-10, Bangladesh exported knitwear items worth $891.61 million and woven garment items worth $2.74 billion.
Currently, Bangladesh is receiving duty facilities for export to the US for some products under the generalised system of preferences (GSP), but the country rarely produces those items. Some of these products are fish and crustaceans, molasses and other aquatic invertebrates; items made from textile articles, needlecraft sets, worn clothing and worn textile articles, and rags.
Recently, the US has decided to continue its GSP facility for Bangladeshi sleeping bags, which will enjoy zero tariffs. This decision came into effect after the Obama administration dismissed a petition filed on July 1 by a US company seeking cancellation of the GSP facility for Bangladeshi sleeping bags entering the US market.
Excel Outdoor, an US company, filed a petition with the United States Trade Representative (USTR) to identify sleeping bags as a textile product and exclude the item from its GSP list.
Following the petition, USTR took an initiative to review the GSP facility in January. In a prompt bid, the Bangladesh government lobbied with the US government after discussing the matter with different stakeholders.
Fazlul Hoque, former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said Bangladesh has been trying to get the duty-free and quota-free access to the US over many years, but it could not do so.
“If the US gives a duty-free and quota-free access to its market, Bangladesh will be the biggest beneficiary, as other members of the LDC bloc are not so strong in the garments segment like Bangladesh. So we want the US to give us such a facility, but it is very time consuming and difficult,” he said.
USTR is currently running a survey on the possible impacts of a duty-free, quota-free access of goods to the US from the LDCs and other countries.
Dr Zaid Bakht, research director of Bangladesh Institute of Development Studies (BIDS), said the US agreed to 97 percent in the Hong Kong Ministerial Meeting, but the major products were not included in this list.
“Of course the US is a big market for Bangladesh. It would be a great advantage for the country,” he said.
He said there are two sides to consider -- economic and political. The US is saying that some other LDCs will be the sufferer if the duty-free, quota-free access is given to Bangladesh alone. As a result, the US might not allow it, he said.
“The political side of the aspect is that Bangladesh did not sign the much-talked about Trade and Investment Framework Agreement (TIFA) with the US. So I do not believe the US will spare everything without some understanding,” he said.
But, Bangladesh should continue to lobby with the US and other LDCs to get the facility, he added.
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