The United States uses the Generalised System of Preference (GSP) to provide for duty-free entry into the US market for some 5,000 products of 122 countries. All member states of the South Asian Association for Regional Cooperation (SAARC), barring Bangladesh, are now entitled to GSP. GSP facility needs to be renewed periodically through the approval of the US Congress. The validity of GSP for Bangladesh ended on June 30, 2013. At that time, the readymade garment (RMG) sector hit the headlines of the world press due to the Rana Plaza factory building collapse and the Tazreen Fashions fire that killed more than 1,200 workers. The two devastating incidents brought Bangladesh’s RMG sector under scrutiny and finally, US President Barack Obama suspended the duty-free benefits. It has not yet been extended. The US GSP scheme did not cover readymade garments of Bangladesh. That’s why the US action did not directly affect export of RMG to the American market as exporters access the market by paying high duty. Moreover, recently the US Trade Representative (USTR) website said, the facility is still suspended for Bangladesh and that it’s closely observing the country’s labour rights scenario. Bangladesh exports, besides apparels, tobacco, sporting equipment, porcelain china, plastic products and a small quantity of textile products. Although the US has introduced GSP to promote exports of low-income countries to industrialised ones in order to support their economic growth and development, Bangladesh virtually did not benefit from it over the past 37 years before its suspension. In 2015, Bangladesh, the third largest exporter of clothing products to the US, earned $5.40 billion, which was $4.83 billion in the previous year, according to recent data. In 2015, the United States imported clothing products worth $85.16 billion from across the globe of which Bangladesh’s share was 6.34 per cent, China’s 35.86 per cent and Vietnam’s 12.40 per cent in terms of value. Herein lies the significance of the US GSP. If our competitor Vietnam can benefit substantially from GSP, there is no reason why Bangladesh cannot move more aggressively in having a share of the pie. The US GSP facility for RMG products will help achieve $50 billion worth of export in 2021. According to the USTR, China secured the top position in exporting RMG to the US with $30.5 billion in 2015. Vietnam’s export earnings stood at $10.5 billion in the year. Among other competitive countries, India exported apparel items worth $3.6 billion with 7.78 per cent growth than the previous year’s export earnings. RMG export growth of Pakistan and Mexico turned negative in that year. Before suspending GSP for Bangladesh, the US proposed setting up of trade unions in all RMG factories as a prerequisite for revival of the tariff- free facility. In the United States, however, only 36 per cent of public and 7.0 per cent of private industries have trade unions. The level of workers’ education, skills, infrastructure and social values in the United States are, however, different from here. The US and the European Union (EU) set up buyers’ associations like Alliance and Accord in Bangladesh. Both the associations are now working hard for workplace and building safety in the RMG sector. The exporters question how trade unions are related to building safety. How could they have prevented the collapse of Rana Plaza? Safety of RMG factory buildings is a technical matter that is looked into by relevant government authorities. At a time when both Alliance and Accord are busy ensuring workplace safety in RMG factories, US buyers have cut prices triggering a great concern for the Bangladeshi exporters. Production cost has increased manifold due to safety upgradation. That is why Bangladeshi exporters are urging the buyers to increase prices but without success. Interestingly, US Republican presidential candidate Donald Trump said, quality of shirts made in Bangladesh is good. Trump himself is sourcing shirts from Bangladesh. Bangladesh offers ease of doing business while import-export is faster. Research and Development (R&D) on new styles is faster as one can import fabrics in three days. In India, it takes 10 days The Export Promotion Bureau has projected Bangladesh’s garment exports to hit $28.09 billion in the FY 2015-16 with 10.21 per cent growth. It is hoped that the US would change its stance on GSP for Bangladesh. The government should also improve political understanding with the US, appoint lobbyists, integrate inter-ministerial coordination efforts, ease obstacles to investment, build strong networking, strengthen negotiation skills and boost bargaining power and excellence of economic diplomacy. The writer is Assistant Deputy Secretary, Bangladesh Knitwear Manufacturers & Exporters Association.
