EU main concern: FBCCI

More than what it means for ready-made garment exports to the US, the suspension of GSP by Washington has set off alarm bells for a different reason.

Published : 28 June 2013, 01:12 AM
Updated : 28 June 2013, 11:35 AM

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) is worried that this might impact on the European Union and Canadian markets which accounts for a major share of Bangladesh’s ready-made garments.

The US sanction does not directly affect Bangladesh's main export, multi-billion-dollar clothing to the United States, since garments are not eligible for duty cuts under the Generalized System of Preference, or GSP.

But it could influence the European Union to take similar action, which would have a much bigger impact on Bangladesh and its garment sector. The European Union buys more than $12 billion in Bangladeshi garments each year, or roughly three-fifths of the country’s production.

FBCCI goes to polls Saturday

”Our ready-made garment exports to US are a negligible portion of the total. So the GSP suspension will not affect our garment exports directly,” FBCCI President Kazi Akram Uddin Ahmed told on Friday.
“But we are apprehensive of the possible impact of Washington’s decision on the European Union and Canada. We just hope they will not follow the US in revoking the GSP,” said Ahmed.” If they do, that will hit us very hard.”
The US has suspended preferential trade status for Bangladesh in the wake of the Tazreen Fashions Limited fire that killed 110 workers and the Rana Plaza collapse that killed nearly 1200 people, mostly garment workers.
The US says Bangladesh industry must improve its working conditions and workplace safety to be able to avail itself of the GSP again.
Some US senators had lobbied hard to end the GSP to push Bangladesh garment industry into protecting workers rights and safety.
After long hearings in which Bangladesh officials also represented the country’s case, the US Trade Representative Michael Froman issued a statement on Thursday night (2:00am Bangladesh time) saying the GSP for Bangladesh garment products should be suspended.
The US GSP accords duty-free access to 5000 Bangladesh-made products, though its main exports, ready made garments, is not included in the list.
Bangladesh has exported $34.7 million worth tobacco, sports goods, ceramics, plastics and other products to the US last year and benefited by $2.0 million in tax savings due to the GSP. But Bangladesh’s garment exporters paid $ 730 million in duty on their total exports worth $4.90 billion.
Sixty percent of Bangladesh’s ready-made garment exports head for the European Union – an annual take-in of $ 12 billion.
”We hope the EU will not do what the US has done. Our government has taken proactive measures to improve workplace safety and worker rights. It is not easy for the EU to revoke GSP and I hope it does not happen,” Ahmed said.
He appealed to the garment industry to be more responsible in the ‘interest of the nation’.
“I hope our business leaders and exporters do nothing that will hurt the country’s interests,” Ahmed said.
He alluded to the possibility that the US decision may not have been influenced by trade considerations alone.
Ahmed said the US was trying to pressurise Bangladesh to accept Rohingya refugees, stop action against Nobel laureate Mohammed Yunus’ Grameen Bank and push for action for the murder of trade union leader Aminul Islam.
“All these were in considerations.”
Toufique Imrose Khalidi
Editor-in-Chief and Publisher