US seeks list of apparel brands that cancelled orders
The US Trade Representative (USTR), the principle trade negotiator for the Trump administration, has sought a set of retailers that cancelled work orders with Bangladeshi companies due to the ongoing coronavirus pandemic.
After securing the list, the US government is expected to urge the retailers to accept their shipments of previously cancelled work orders.
A senior official of the USTR expressed his organisation's willingness to carry out this initiative throughout a virtual meeting of the Trade and Investment Cooperation Forum Agreement (TICFA) Council with Bangladesh's representatives on Tuesday.
The fifth round of meeting under TICFA, which was signed in November 2013 in a bid to make a platform for two countries to negotiate trade and investment, happened in Dhaka in March.
A sigificant number of work orders for garment items totalling $3.2 billion have either been cancelled, deferred or withheld at various seaports as retailers in the US are reluctant to accept deliveries amid the current economic uncertainty, based on the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
However, the international buyers who did not cancel or defer their work orders are demanding unusual payment terms.
For instance, almost all of the retailers complete payment within 3 months after positioning an order according to the contract outlined in the letter of credit. Now, buyers have asked for 180-210 days to complete their payment.
Because so many local garment manufacturers are giving directly into these demands in a bid to keep their functions afloat amid the monetary maelstrom, the sector has come across a liquidity shortage and numerous personnel have lost their jobs along the way.
Through the meeting, Bangladesh said that US investors may help create manufacturing plants for coronavirus vaccines since it would make the highly sought-after drug less expensive and available for the country.
"We need far more foreign direct investment to spur on our country's development," said Commerce Secretary Md Jafar Uddin, who led the Bangladesh delegation.
Christopher Wilson, an assistant USTR representative for South and Central Asia, led the united states delegation.
Entrepreneurs from the united states are the most significant investors in Bangladesh, with the heaviest investments being manufactured in the country's energy sector.
But now, Bangladesh is seeking more American investment in the pharmaceutical sector, which has grown rapidly through the years.
"If US investors create vaccine manufacturing plants in Bangladesh, it may be a timely decision because the demand for it is extremely high at this time," Uddin said following the meeting.
The Bangladesh team also demanded more American investment in non-coronavirus-related pharmaceutical industries.
"We told the US to purchase contract-manufacturing of medicine to ensure that they are able to produce various pharmaceutical products here and later ship some back," Uddin added.
Investing in Bangladesh's pharmaceutical industry could indeed be lucrative for foreign investors as the united states is permitted produce patented drugs cheaply without securing a licence until 1 January 2033.
This is because of a decision made by the World Trade Organisation under the Trade-Related Intellectual Property Rights (TRIP) agreement.
Because of this facility, the neighborhood pharmaceutical industry has thrived, meeting 98 per cent of the domestic demand.
Because of this, many local drug makers are actually exporting their products to practically 150 destinations, including the US, Canada, the UK and the EU.
In fiscal 2019-20, Bangladesh's pharmaceutical exports grew by 4.5 % year-on-year to $136 million, according to data from the Export Promotion Bureau (EPB).
Bangladesh could also be a prime location for American companies to relocate to as much Japanese and Chinese firms are moving to the united states due to its trade privileges and competitive production costs.
In a virtual presentation during the meeting, the Bangladesh Investment Development Authority detailed the country's initiative to launch One-Stop Service centres that could help both local and international investors.
The problem of reinstating the Generalised System of Preferences (GSP) for several Bangladeshi products bound for all of us markets was also raised.
Beneath the facility, Bangladeshi goods such as for example dry fish, tobacco and ceramics would enjoy duty-free access.
Prior to the country's GSP status was suspended, Bangladesh shipped products worth $24 million to the US each year beneath the preferential trade treatment.
The existing GSP scheme's tenure should come to a finish in December either way, the united states delegation said.
Therefore, Bangladesh could connect with the USTR for renewal of its GSP status when the next thing comes, according to a statement from the commerce ministry yesterday.
The government suspended Bangladesh's GSP status back in June 2013, citing poor labour rights and working conditions following a nation's deadliest industrial accident, the collapse of Rana Plaza, in April that year.
About 1,138 workers in the industry complex were killed while 2,500 were left severely injured.
After that, the US government outlined 16 terms and conditions to be fulfilled by its Bangladeshi counterparts prior to the country could regain its GSP facility.
Bangladesh has achieved the conditions, which mainly relate to improving labour rights, workplace safety and remediation of garment factories by the Accord and the Alliance.
The country has since applied twice for the reinstatement of its GSP status however the USTR is yet to provide the all-clear as far more improvements to the country's labour laws must be made.
"Nonetheless, we are hopeful that the US will consider our appeal items this time around as Bangladesh has already fulfilled all of the conditions," Uddin said.
Locally made apparel items should also be given duty-free usage of the US though it does not provide this scope for just about any other country other than a few African nations under the African Growth and Opportunity Act.
Bangladesh imports tonnes of cotton from the united states each year therefore, these garment products should get the duty-free facility, he added.
During the meeting, the US delegation demanded cotton imported from the US be not fumigated upon arrival as it had already been through the procedure before being shipped.
Double fumigation deteriorates the cotton's quality and in addition causes a delay in the manufacturing process.
The double fumigation method was introduced in the 1950s, during Ayub Khan's tenure as leader of East Pakistan, now referred to as Bangladesh, to avoid bollworm attacks.
The US is Bangladesh's single most significant export destination but about 95 % of all exports to the country are garment products.
As much as 97 per cent of the products of Bangladeshi origin had enjoyed duty-free usage of US markets due to the country's classification as an LDC.
Under the LDC category, Bangladesh products still get tax-free entry to many other destinations, according to the decision taken during the Hong Kong Ministerial Meeting of the WTO in 2005.
However, the country's main export item, garment, was not contained in the 97 % package even in the past.
Garment exports account for 95 per cent of Bangladesh's overall shipments to the united states.
With the prevailing regulations, Bangladeshi apparel items are at the mercy of 15.6 % upon arrival in the US.
