Bangladesh - Duty-Free Access For RMG Hinges On Good Ties With US
Dated- 29 Jul , 2012 - Bangladesh
US Ambassador Dan W Mozena yesterday said Bangladesh should create a good climate in relationship with the US to get duty-free access for its readymade garment items to the US market.
Mozena also said getting such an access and the benefit of Generalised System of Preferences (GSP) from the US is a political process.
He suggested Bangladesh should lobby the US Congress, which decides on giving the duty-free market access to any country.
Mozena spoke at a discussion on 'Bangladesh-US bilateral trade: the way forward' organised by Dhaka Chamber of Commerce and Industry (DCCI) at its office in the capital.
Bangladesh has been lobbying the US for quite a long time to get the trade benefit, but the US has been delaying it.
Under the current customs rules of the US, 97 percent Bangladeshi products enjoy duty-free access to the US market, but the country's key export item, garments, are excluded from the package.
Though Bangladesh is a least developed country, it has been exporting garment items to the US by paying an average duty at 15.3 percent, which is higher compared to what developed and developing countries pay.
Bangladesh paid more than $600 million in duty for exporting garments worth $5.10 billion in 2011, while China, world's largest apparel supplier, pays 3 percent duty on garment exports to the US market.
“The good idea is to create a good climate in relationship between Bangladesh and the US,” Mozena said.
“Telling the ambassador (to give the duty-free access) is just wasting your time. It is the political process.”
The ambassador also said Bangladesh needs to deliver a powerful message to the US that the country ensures rights of its workers.
On labour rights grounds, the American Federation of Labour and Congress of Industrial Organisations (AFL-CIO) has already filed a petition to the United States Trade Representative (USTR) to cancel the GSP benefit that Bangladesh had earned earlier from the US.
However, after a hearing in January this year, the USTR decided to continue the GSP benefit for Bangladesh and review the country's labour rights issues further.
The US government had earlier extended the GSP for Bangladesh up to July 31, 2013. Currently, GSP covers less than 1 percent of the total export to the US from Bangladesh.
The US ambassador advised Bangladesh to sign the Trade and Investment Cooperation Framework Agreement (TICFA) with the US to establish a good climate in bilateral relationship.
“The TICFA is needed to discuss and remove all obstacles. We should have this forum,” Mozena said.
Bangladesh has the opportunity to be the largest garment exporter worldwide as the country has a vibrant private sector business community.
Bangladesh can also be a good investment destination as the country has a good reserve of natural gas and human resources. “The people are great asset of the country. You have to invest in the people,” he said.
But, political instability and uncertainty, red-tapism, corruption, weak port management and the bad condition of roads and highways -- especially the Dhaka-Chittagong highway -- are the major obstacles to bringing more foreign direct investment in Bangladesh, Mozena said.
Bangladesh has the scope to be a communication hub like Singapore for its geographical location. Bangladesh is at the centre of Afghanistan, India, China and Nepal. “It's a blessing,” he said.
On the Padma bridge project, Mozena expressed his disappointment as both the Bangladesh government and the World Bank (WB) are yet to resolve the issue.
“…that was deeply disappointing, because the Padma bridge is important to 15 million people of the south-west region of the country. This is bridge is also important for establishing communication with other South Asian countries,” he said.
Aftab ul Islam, president of American Chamber of Commerce in Bangladesh (AmCham), said the private sector is paying the penalty for any fault of the government.
“We should be more responsible while making comments,” he said. “We should learn more diplomatic words. Our advisers should also understand the political and diplomatic words. The advice should be given in a right direction,” Islam said.
While moderating the meeting, Dhaka Chamber President Asif Ibrahim said the TICFA issues should be discussed with the private sector.
Khondaker Golam Moazzem, senior research fellow of the Centre for Policy Dialogue, said, “Compliance has improved in Bangladesh and it is improving further. The US should not tag the labour related issues with market access.”
According to data from the DCCI, Bangladesh exported goods worth $3.75 billion to the US in July-March of the immediate past fiscal year, while imports were worth $0.57 billion.
In fiscal 2010-11, Bangladesh exported goods worth $5.10 billion to the US and imported products of $0.68 billion.