BD RMG to face 36.5pc tariff in US market: BGMEA

Bangladeshi-made readymade garment exports to the USA will face tariff at a rate of 36.5 per cent which includes 20 per cent reciprocal and existing 16.5 per cent tariff.

The local RMG exports to its largest destination would get conditional duty exemption if the apparel is produced using at least 20 per cent American raw materials.

Clarifying the tariff issues, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Mahmud Hasan Khan at a press conference on Saturday also urged the interim government to continue its negotiations with the United States. Some countries were still in talks with the Trump administration on trade or security deals that may result in even lower reciprocal tariffs for them, he added.

"There is no room for complacency. The latest US executive order clearly states that US trade or security agreement negotiations with some countries are still ongoing," he said, adding these negotiations, once executed, could further reduce the tariffs of those countries.

"So Bangladesh needs to continue the negotiations," he said, at the press conference held at the BGMEA complex at Uttara in the city.

Praising the leadership of the interim government, especially the commerce and security advisers, the BGEMA chief said the team efforts helped Bangladesh steer away from a possible crisis.

Previously, Bangladeshi-made RMG items faced MFN (most favoured nation) tariffs at a rate of 16.5 per cent, which due to the new 20 per cent additional duty would stand at 36.5 per cent, he said, adding the tariffs would vary based on different products.

Mr Khan also thanked the US government for announcing a balanced tariff structure which has been an issue of concern for the local exporters for the last four months.

The US cut the additional duty for Bangladesh's exports to 20 per cent from 35 per cent, which is now equal or on a more equal footing with the major competitors -- lower than China's 30 per cent and India's 25 per cent, he added.

Citing the US executive order on tariffs, the BGMEA president further said if at least 20 per cent of US raw materials (such as American cotton) were used, the additional 20 per cent tariff would not be applicable to the value of American raw materials.

"If we use American raw materials, we will get some additional tariff relief," he said, adding about 75 per cent of Bangladesh's apparel exports to US are cotton-based.

The BGMEA chief, however, expressed concern about the possible impact of the 20 per cent additional duty on production costs.

The government should provide its supports to the local garment industry that was struggling with rising cost of production, especially the small and medium factories, so that they do not go out of the market, he said. He stressed improved efficiency at Chittagong Port, uninterrupted energy supply, and a more industry-friendly customs system.

Responding to a question, Mr Khan said they were still unaware of the conditions. "We hope that the government will be careful about implementing the agreements made with the United States," he added.

Munni_fe@yahoo.com