US Trade Representative Michael Froman in a statement in the early hours of Friday (BdST) said President Barack Obama suspended Bangladesh’s GSP status until the country improved workers’ safety in the clothing industry.
The move will bring tariffs back on some of Bangladesh’s exports to the US market and will cost the country millions of dollars in taxes.
Textile and garment export are Bangladesh’s largest source of foreign exchange earnings.
EPB’s Basu told bdnews24.com that Bangladesh apparels do not get GSP facility in the US market. And because 86 percent of the country’s exports to the US consist of garments, the decision would not negatively impact the overall export scenario.
The preferential trade benefits let Bangladesh export commodities to the US without taxes.
The US is Bangladesh's single largest export market. According to the EPB, the total exports during the 2011-12 fiscal were billed at $ 24 billion. Exports to the US accounted for about 21 percent of the total with a valued of around $5.1 billion, of which apparel export was worth $4.53 billion.
According to the US Trade Representative, Bangladeshi businessmen earned $34.7 million by exporting tobacco, sports equipment, porcelain china and plastic products to the US and duties waived were to the tune of $2 million.
Now, with the GSP status temporarily gone, businessmen will have to pay export duties, resulting in a decline in profits.
“But the volume of exports,” Basu said “won’t decrease because the items for which Bangladesh enjoys the GSP facility are capable of competing in the global market.”
But exporters of plastic goods, which enjoy GSP status, feel suspension of the facility will marginally affect their exports to the US. However, the situation could turn critical for Bangladesh if other importers were to be influenced by the US move, they feel.
AKM Zahirul Quyum Khan, a Member of the Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA), told bdnews24.com: “As a single item, the volume of exports of plastic items isn’t very big. But there will be problem if the other importing countries take a similar decision.”