Bangladeshi RMG products currently do not have duty-free access to US and Brazil, even though these two countries enjoy duty-free access for the cotton they export to Bangladesh for its apparel industry. Moreover, the US suspended Generalised System of Preferences (GSP) facilities for Bangladesh on June 27, 2013.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in a letter sent to the US ambassador to Bangladesh on February 16, President of BGMEA Siddiqur Rahman has requested for duty-free access to the US for Bangladeshi RMG products made from cotton imported from the US.
A similar proposal was sent to the Brazilian government via the Ministry of Foreign Affairs on Sunday.
Bangladesh is the second largest importer of cotton in the world; the country imported 6.1 million bales of cotton last year. There are 430 textile mills in Bangladesh with a spindle capacity of 11.50 million.
Bangladesh has long been importing cotton from the US to make apparel for export and hence they firmly believe that US exports of cotton will grow significantly if apparel products made of the US cotton receive favourable treatment in terms of tariff in accessing the US market, the BGMEA president said in the letter.
If the US government extended duty-free market access for Bangladeshi RMG products made from US produced cotton, it would create a win-win situation for bilateral trade between the two countries.
The US is the single largest export destination for Bangladeshi products, especially apparel. According to BGMEA data, in July-December of the 2016-17 fiscal year, Bangladesh earned $2.56bn, a 9.11% decline from the $2.81bn earnings during the same period in 2015-16.
However, in the 2015-16 fiscal year, export to the US saw a 6.36% growth, amounting to $5.62bn, compared to the $5.28bn earnings in the 2014-15 fiscal year.
Brazil also has high potential for Bangladeshi apparel products, but their import duty is high, ranging from 30% to 35%, said the BGMEA letter sent to the Ministry of Foreign Affairs.
Bangladesh needs to find a way to secure duty-free access to the Brazilian market and the Brazilian government should consider providing duty-free access for Bangladeshi apparel products made from Brazillian cotton exported to Bangladesh.
In July-December of 2016-17 fiscal year, Bangladesh earned $41m from garment exports to Brazil compared to $75m in the same period a year earlier. In FY2015-16, total RMG exports to Brazil reached $120m.
The BGMEA argued that providing duty free access for Bangladeshi apparel products made from Brazilian cotton exported to Bangladesh would prove profitable for both Bangladesh and Brazil in terms of trade.
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