US to consider including Bangladesh apparel in new GSP

• US considers including Bangladesh's RMG items in new GSP programme
• Items included in the programme will have duty-free access to the US market
• Bangladesh currently faces a 15% duty on RMG exports to the US
• US to consider Bangladesh's proposal to reduce registration fees for Bangladeshi pharmaceutical products
• Bangladesh seeks inclusion in US International Development Finance Corporation funds

A good number of RMG items could be included in the new GSP programme of the United States, officials of the Office of the United States Trade Representative (USTR) have informed the Bangladesh government, adding that if Bangladesh is included in the programme and meets the specified conditions, it could export RMG products under duty-free facilities.

The revelation came in the Seventh US-Bangladesh Trade Investment Cooperation Forum Agreement (Ticfa) meeting held in Dhaka on Wednesday. 

During the meeting yesterday, US officials also expressed interest in considering Bangladesh's proposals to reduce registration fees for pharmaceutical products from Bangladesh, and impose tariffs solely on the value added in Bangladesh for RMG products made from US cotton, according to commerce ministry sources. 

Discussions involved labour rights, a speedy trial for labour leader Shahidul Islam's murder, and revising labour laws as per ILO recommendations, said the commerce secretary.

The US has also asked for simplifying the existing provisions on the unionisation of workers in factories. At present, a trade union in any factory requires the written consent of at least 20 percent of the workers. The US has asked to reduce this to at least 15% and simplify the online application process.

"USTR officials said Bangladesh can get the new GSP benefits in two ways -- firstly, by fulfilling the compliance criteria set for getting GSP benefits and secondly, as per the decision of the Senate," said an official of the commerce ministry.

Presently, Bangladesh faces approximately a 15% duty on RMG product exports to the US market. 

Currently, Bangladesh imports 14% of its cotton requirement from the United States.

Speaking on this matter, Commerce Secretary Tapan Kanti Ghosh cited USTR officials as saying that some RMG products that are not on the GSP sensitive list will be given GSP benefits.

He noted that the new GSP program offers various options, and discussions are ongoing to determine Bangladesh's eligibility.

No date yet for GSP benefit

However, no information as to when the new GSP programme would be implemented was shared at the Ticfa meeting. Several officials from the commerce ministry who were present at yesterday's meeting clarified that Bangladesh did not propose reinstating the GSP facility suspended in 2013. However, according to the decision of the WTO's Hong Kong Ministerial Conference in 2005, Bangladesh asked for duty free-quota free benefits in the US market.

In response, USTR officials said the US GSP programme expired in 2020 and that they are finalising the new programme, which is now under review in the Senate.

Business leaders optimistic

Mohammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) told TBS, "If the US gives us duty free access of apparel items made  from US cotton, it will create an opportunity to benefit both countries."

"It's our logical demand and the USA should consider it in a positive light," he added.

Shahidullah Azim, vice president of the BGMEA, echoed the sentiment, highlighting the competitive advantage such access would provide.

Commerce Secretary Tapan Kanti said, "Bangladesh also requested its inclusion in the list of US International Development Finance Corporation (IDFC) funds. However, they [USTR officials] said the conditions for GSP and DFC financing are the same."

At the WTO Hong Kong ministerial meeting, it was agreed to provide duty-free export facilities to 97% of LDCs' products, but the US didn't implement it. 

After the Rana Plaza incident, the US suspended Bangladesh's GSP, and set conditions to implement certain action plans. The commerce ministry at different times claimed to have met these conditions, but the US sees room for improvement in labour conditions.

Professor MA Razzaq, chairman of the Research and Policy Integration for Development (RAPID), told TBS that China still has a significant share in US apparel imports.

Both US and Bangladesh to benefit from GSP

Due to geopolitical reasons, the country wants to reduce imports from China, he said, adding that even if imports from Vietnam and Cambodia increase, Chinese traders will benefit because Chinese investment in those two countries is very high. 

For these reasons, both the United States and Bangladesh will benefit from GSP benefits for Bangladeshi-made garment products.

Razzaq said Bangladesh will graduate from the LDC status within three years. Therefore, if the US GSP is only for LDCs, Bangladesh will not get much benefit. Bangladesh will benefit a lot if the United States has a GSP scheme for developing countries like Europe's GSP Plus.

Stating that it takes a lot of time and fees to register the pharmaceutical products of Bangladesh in The United States Food and Drug Administration, the commerce secretary said Bangladesh, being a least developed country, has proposed to reduce this time and fees. "Because we have many state of the art pharmaceutical factories, and a robust pharma sector."

"President Joe Biden wants to reduce health care costs, we have also highlighted that," said the secretary.

US officials at the meeting requested a written proposal from Bangladesh regarding fee and time reductions. 

Trips discussed

The US officials mentioned that Bangladesh's copyright law is in conflict with the Paris Convention and TRIPS. 

Opposing this, Bangladesh said that Bangladesh is a subsidiary of the Paris Convention and TRIPS. As a result, Dhaka will never make any law that conflicts with these. If something like this is identified in the Copyright Act, it will be amended.

The US requested measures against counterfeit product exports, which Bangladesh denied, inviting complaints for action.

The US side also sought a solution to the problem of repatriation of profits or loan instalments of US companies doing business in Bangladesh. In response, representatives from the Bangladesh Bank said that they had information about a company's problem. Bangladesh Bank has given instructions to the participating banks to solve the problem. This problem will be solved soon.

The Bangladesh Bank official advised them to inform Bangladesh Bank if any other US company has the same problem.

The United Kingdom recently introduced the Developing Countries Trading Scheme, and the European Union will introduce a new GSP scheme early next year. 

The new schemes impose conditions related to labour rights, child labour, human rights, and workplace safety. The ILO Convention's full implementation is supported by the US, UK, and EU.

The US is Bangladesh's largest export market, with $9.7 billion in total exports last fiscal year, including %8.5 billion in RMG, according to the Export Development Bureau.

The commerce secretary noted that exports to the US increased from $5 billion at the signing of Ticfa to almost $10 billion at present, with potential for growth to $16 billion with GSP benefits.