Bangladesh cannot yet fully gain from duty-free market access to China

Bangladesh is not being able to reap the duty-free benefit in the Chinese market to the fullest extent as more than one-third of its readymade garment (RMG) exports to that country is still subjected to payment of duty, industry people said.

In June last, the Tariff Commission of the Chinese State Council issued a notice on granting zero treatment to 97 per cent of tariff products of Bangladesh to its market effective from July 1, officials said.

With the announcement, China had included additional 5,161 Bangladeshi products to enjoy zero-tariff treatment in its market.

Prior to that announcement, 3,095 Bangladeshi products were eligible for duty-free access to the market under Asia -Pacific Trade Agreement, they added.

The commerce ministry has recently published a list of 8,256 products, which would get duty-free access to China, they added.

According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA), locally produced RMG items would get additional facilities in China with the announcement of duty-free market access of 97 per cent export product, but 100 per cent RMG products would not enjoy the facility.

Bangladesh's total RMG export to China in the financial year 2018-19 was $507 million and $308.4 million of it was under duty-free facility, said BGMEA president Dr Rubana Huq.

RMG export worth $198 million faced duty during that year, she noted.

The RMG products worth $20 million out of $198 million would be included in the latest duty-free scheme, she said.

"Almost $178 million RMG exports are still excluded from the duty-free access, which is 33 to 38 per cent of our total RMG export to China," she said adding that these exportable Bangladeshi RMG faced 6.0 to 12 per cent duty there.

Bangladesh exported 155 products in FY'19 to China while 47 products still remained out of the duty-free scheme.

The BGMEA leader also expressed concern over the revised rules of origin for 40 per cent value addition set by China to avail duty-free access to the market.

Bangladesh would have to add 40 per cent value to get duty free benefit in China, she said, adding that it would be challenging for the exporters to comply with the new rules of origin.

Earlier, the threshold for value addition was 30 per cent for the China market.

Experts and exporters said the government should look into the issue and take measures to help expand the product list under the duty- free market access to China.

Experts, however, suggested that the RMG sector would have to expand its backward linkage industry to tap the full benefit of duty- free market access to China.

Bangladesh's RMG export to China declined by 34.35 per cent to $72.21 million in the first quarter of FY 2020-21 which was $109.99 million during July-September period of the last fiscal, according to official data.

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