Bangladesh's garment export to the US could be increased by between $400million to $800million annually if the US government arranges a cotton GSP scheme to waive duty on apparels made using cotton imported from the US, according to a study.
At the same time, USA can export $3billion worth of cotton to Bangladesh in next five to six years if the US government allows Bangladesh duty free export of apparels to the American market made from cotton imported from the USA, Mohammad Abdur Razzaque, Research Director of the Policy Research Institute (PRI) said on Monday.
Razzaque said it in a keynote paper he presented at a seminar on Bangladesh - US trade and investment, hosted by the Economic Reporters' Forum (ERF) at its auditorium in the capital.
Cotton GSP scheme is a special scheme that the US can provide to Bangladesh to allow it duty free export of garment items to the American market but made from cotton imported from the USA.
Over the last few years, Bangladesh's apparel Manufacturers and exporters and the government have been negotiating with the US government for allowing 15.62 per cent duty waiver on apparels exported to the USA made from cotton imported from America.
Economists, business leaders, exporters and diplomats attended the seminar.
Razzaque, Chairman of the Research and Policy Integration for Development (RAPID), a private think tank, said this scheme would be beneficial to both the countries.
Bangladesh should also ensure fibre security in future as it produces less than two per cent of the required nine million bales of cotton and almost the entire cotton is imported from the USA is becoming a good source of it, Razzaque said.
Only the sky is the limit for attracting investment from the USA in different sectors in Bangladesh, said Masrur Reaz, Chairman of the Policy Exchange of Bangladesh, another private think tank.
He said currently, Bangladesh is the world's second largest apparel exporter and third largest manufacturing hub for volume and low valued garment items worldwide.
However, Bangladesh needs to improve the border and customs clearance system for attracting more foreign direct investment, Reaz said.
Urging for reinstating the GSP status for Bangladesh, Faruque Hassan, President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said the cotton GSP scheme will be a win-win situation for both countries as the local jute millers import 11.5 per cent out of nine million bales of cotton from the USA.
Bangladesh has a lot of scope to explore the US markets as its suppliers can meet 9.7 per cent demand USA's apparel needs annually.
For instance, Bangladesh is now the top denim garment exporter shipping over $1.0 billion worth of denim items to the US annually, and the third largest garment exporter to the USA after China and Vietnam.
Opportunities await Bangladesh in non-cotton category in the US market, Hassan said.
"I hope USA will consider reviving the GSP for Bangladesh as it has complied with the 16 point Bangladesh Action Plan of the US government for GSP reinstatement," Hassan said.
Australia and the UK have already confirmed that they will continue with their zero tariff trade benefit even after Bangladesh's LDC graduation, but the USA is not doing that, he added.