BGMEA President Mahmud Hasan Khan has said the 20 percent US countervailing tariff on Bangladeshi products will not be applicable if 20 per cent of US raw materials are used in production of various products, including ready-made garments and exported to the USA.
He said it at a press conference in BGMEA Building in Uttara on Saturday. Earlier the US government reduced the countervailing tariff from 35 per cent to 20 per cent in the final round of negotiation, he said.
Mahmud Hasan Khan said that about 75 per cent of our US exports are cotton-based garments. The US tariff rules particularly states that if at least 20 percent of American raw materials (such as American cotton) are used, then this additional 20 percent duty will not be applicable. That is, if we use American raw materials, we will get some additional duty exemption.
Bangladesh Garments Manufacturers and Exporters Association (BGMEA) said ideally an average tariff of 36.5 per cent will be effective on garment exports from Bangladesh to the United States. It includes the newly imposed 20 percent countervailing duty along with existing 16.5 per cent duty.
Thus the US cotton use in making apparels would secure more tariff benefits to apparel exports and it means much of the adverse impact of the US counter tariff will be neutralized at the end.
BGMEA Senior Vice President Enamul Haque Khan Bablu, Vice President Rezwan Selim, Vice President (Finance) Mizanur Rahman, Vice President Shihab Uddoza Chowdhury, Director Shah Raed Chowdhury, Mohammad Abdur Rahim, Faisal Samad, Hasib Uddin, Mohammad Abdus Salam, Nafis-ud-Daulah, Majumder Arifur Rahman, Joarder Hosne Qamar Alam, Asef Kamal Pasha, Rumana Rashid and Samiha Azim also attended the event.
Mahmud Hasan said, "The tariff reduction is undoubtedly a relief, but there is no room for complacency. Because we have more challenges ahead. We have to continue negotiations with the US on various issues, including trade and security agreements. At the same time, we have to increase the use of US raw materials and utilize the opportunity of tariff exemption."
"We have also no room for complacency, because the latest US executive order clearly states that US trade or security agreement negotiations with some countries are still ongoing, which if executed could further reduce the tariffs of these countries. Therefore, Bangladesh needs to continue the negotiations," said the BGMEA President.
The BGMEA president expressed sincere thanks and gratitude to the US government for agreeing to a balanced tariff structure. The additional import duty from Bangladesh has been reduced from 35 per cent to 20 per cent, which is equal or close to that of our main garment exporting competitors and lower than some of our main competitors such as China (30 per cent) and India (25 per cent).
He also expressed gratitude to the leadership of the interim government, especially to Commerce Adviser, Security Adviser and their team during the difficult negotiations. It is due to their commendable efforts that Bangladesh has been able to avert a major disaster. However, this result did not come in a day; the journey was full of challenges, he added.
He said, the US initially imposed the new tariff called 'Liberation Day Tariff' on last April 2, at 37 per cent on Bangladesh. Then 26 per cent tariff was imposed on India, 32 per cent on Indonesia and 30 per cent on Pakistan.
"This ( 37 percent) emerged as a big threat to our exports; because it is would not be possible to sustain the market with such a large tariff gap. About 20 percent of our total export earnings come from the US, while 87 per cent of our total exports to the country are ready-made garment products."
Although the tariff announcement on April 2 was supposed to be effective implemented from April 9, it was postponed for 90 days; which gave Bangladesh some time for negotiations. However, an additional 10 percent base tariff was introduced from April 5.
