Cotton GSP scheme win-win situation for BD, USA
Staff Reporter :
Experts and businesses on Monday said that the cotton GSP scheme would be a win-win situation for both Bangladesh and USA as 11.5 per cent of the total nine million bales of required cotton is imported from America.
Besides, the local apparel export earnings from the USA market may increase more $800 million yearly if the cotton GSP scheme is arranged to waive the duty on locally made apparel from the US cotton and re-exported to the market, they added while speaking at a seminar on “Bangladesh – US trade and investment,” organsied by the Economic Reporters’ Forum (ERF) at its auditorium in the capital.
Similarly, the USA can also export $3 billion worth of cotton to Bangladesh in next five to six years if it allows Bangladesh duty-free export of locally made garment items to the market made from the US cotton, they said.
Cotton GSP scheme is a special scheme that the US can take for Bangladesh to allow duty-free export of garment items to the American market but made from the imported cotton from the USA.
Over the last few years, the local garment suppliers and the government have been negotiating with the US government for allowing 15.62 per cent duty waiver on the apparel items exported to the market but made from the US cotton.
Dr Abdur Razzaque, Chairman of the Research and Policy Integration for Development (RAPID), said this scheme is low-hanging fruit for both countries which means if the government of the two countries want they can implement it easily which is win-win for both.
Bangladesh should also ensure the fibre security in future as Bangladesh does not produce less than two per cent of the required nine million bales of cotton and almost the entire demand is met through import and USA is becoming a good source for the fibre gradually, he added.
Urging for reinstating the GSP status for the country, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said the cotton GSP scheme will be a win-win situation for both countries as the local millers import 11.5 per cent of required cotton from the USA.
Bangladesh has a lot of scope to explore the US markets as the local suppliers can meet 9.7 per cent demand of the total import of apparels by the USA in a year.
For instance, Bangladesh is now the top denim garment exporter with shipping more than $1.0 billion worth of denim items to the US in a year, and third largest garment exporter to the USA after China and Vietnam.
An ample opportunity is waiting for Bangladesh in non-cotton category to the US market, Hassan also said.
“I hope USA will consider the revival of the GSP as Bangladesh has complied with the 16 point Bangladesh Action Plan provided by the US government to Bangladesh for GSP reinstatement,” he said.
Australia and the UK have already confirmed that they will continue zero tariff trade benefit even after the LDC graduation, but the USA is not giving, he added.
“We do not want aid, we do believe in trade,” he said.
Mohammad Ali Khokon, president of Bangladesh Textile Mills Association (BTMA), said currently Bangladesh imports 20 per cent cotton from India, 11 per cent from USA and 3.0 per cent from Australia.
He said the Joe Biden administration should follow the fifth Ministerial Conference of the World Trade Organisation (WTO) held in Hong Kong in 2005 where the developed countries agreed to give duty-free trade benefit for 100 percent products, but the USA is giving on 97 percent products and unfortunately in garment items is not included in this 97 percent package.
The demand for cotton made garment items will not fall although the demand for the non-cotton fibre made garment items is rising worldwide, he said.
John Fay, Commercial Counselor of the US Embassy in Dhaka, said there is a possibility of reducing the duty on export of garment items to the USA from Bangladesh. However, he did not elaborate it in his speech.
But, he mentioned some challenges in investment in Bangladesh such as problem of profit repatriation, intellectual property rights, data protection act and challenges of logistics services.
There is a big potential of the USA for investment in healthcare, ICT, education for investing in Bangladesh by the American investors, Fay also said.
He suggested Bangladesh for improving in the labour rights, labour law reforms and freedom of association for reviving the GSP, which is lapsed now since December 2020.
The US Congress did not take new scheme until now.
Fazlee Shamim Ehsan, Vice-President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Shams Mahumd, Managing Director of Shasha Denims Ltd, Masrur Reaz, Chairman of the Policy Exchange of Bangladesh, ERF President Mohammad Refayet Ullah Mirdha and its General Secretary Abul Kashem, among others, were present.
