Bangladesh to benefit from Ethiopia’s loss of duty-free facility in US 

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Bangladesh can gain from the suspension of duty-free access to the US market for Ethiopia, a potential apparel export rival as buyers prefer this African nation for low manufacturing costs, according to apparel exporters.   

Industry insiders think the loss of Ethiopia's duty-free benefit will bring in more orders for Bangladeshi apparel makers.

Ethiopia, already under strain from the growing cost of the conflict in its northern regions and pandemic impacts, is going to lose tariff-free access to the US market under the African Growth and Opportunity Act (AGOA) from 1 January next year, according to global media reports. 

African manufacturers now enjoy tariff-free access to the US market under the scheme. 

The Horn of Africa nation exported goods worth $245 million to the US last year, accounting for almost half its shipments to America.

BGMEA Vice-President Shadullah Azim told The Business Standard that the US move to suspend the duty-free facility for Ethiopia will help Bangladesh as the former is a preferred supplier country for a number of buyers." 

Many Bangladeshi apparel manufacturers, who have plans to go for investment in Ethiopia to capitalise on low production costs there, will also be discouraged following the announcement to disqualify the country, he added, 

BKMEA Vice-President Fazlee Shamim Ehsan said Ethopia is not a big exporter, but a number of brands place orders there only because of the country's duty-free access to the US market.

The US suspension will bring good news for Bangladesh as buyers will think twice about going to Ethiopia. Investors will also refrain from investing in the country as the duty-free facility will go soon, he added.

The duty-free benefit brings Ethiopia about $100m in "hard cash" annually and directly generates employment for about 100,000 people, mostly women in southern Ethiopia working in textile factories that export to the US, according to Vanda Felbab-Brown, co-director of the African Security Initiative at Brookings, reported African Business.

In recent months, the US has harshly criticised the conduct of Ethiopia's war in the Tigray region, which began in November 2020 and is estimated to have claimed tens of thousands of lives. 

Human rights organisations have reported massacres and mass starvation as the government's war against the Tigray People's Liberation Front has escalated.

In a recent statement to Congress, US President Joe Biden said Ethiopia's "gross violations of internationally recognised human rights" would lead to its disqualification from the scheme, according to a statement issued by AGOA.

Tuesday's suspension follows a September 17th executive order sanctioning Ethiopians involved in violence in the Tigray region. 

Biden said the situation in northern Ethiopia, characterised by "widespread violence, atrocities, and serious human rights abuses" constituted "an unusual and extraordinary threat to the national security and foreign policy of the United States."