BGMEA calls for duty-free access to the US market for apparel made from US cotton

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Faruque Hassan, President, BGMEA

You are aware that the Government of Bangladesh has issued a gazette notification dated February 19, 2023, which eased the rules of mandatory fumigation tests for importing cotton from Western Hemisphere countries or regions that covers the United States of America. We appreciate our government for this policy reform and we thank the US government for discussing this issue in the bilateral forums. This will certainly make trade easier and reduce the time and cost of importing cotton from the U.S.A.

BGMEA calls for duty-free access to the US market

As you know that Bangladesh is the second largest apparel exporting country in the world, and our share in the global apparel trade is 6.37% (WTO, 2Q21). In 2022 Bangladesh’s apparel export to the world reached US$ 45.71 billion. This may also be noted that a significant share of our apparel is made of cotton. In 2022 we exported around US$ 32.86 billion worth of cotton garments, which is 71.89% of our total garments export. Despite the challenges including Covid-19, our apparel export to the world has increased by 8.73% annually in the last 10 years which reflects the fact that we have further potential in the world market.

Bangladesh does not grow much cotton and almost 99% of our cotton needed for the export-oriented readymade garment (RMG) industry is met by imports. This makes us the second-largest cotton-importing country in the world. Last year we imported 4080 million pounds of cotton from the world of which almost 409 million pounds were imported from the U.S.A. Furthermore, the cotton that we import for the export-oriented RMG industry comes completely free of import duty, which gives a cost advantage to cotton growers and exporters.

On the other hand, as far as U.S.A.’s apparel import from Bangladesh is concerned it reached US$ 9.74 billion in 2022, of which US$ 6.91 billion worth of apparel was made of cotton which means 71% of the USA’s apparel import from Bangladesh is cotton made. U.S.A.’s cotton apparel import from the world in 2022 was worth US$47.51 billion of which the share of Bangladesh was 14.54%. It clearly shows that Bangladesh is one of the major suppliers of cotton-made apparel to the U.S.A.

It may be further noted that U.S.A. importers had to pay US$ 1.55 billion worth of duty to import US$ 9.74 billion worth of apparel from Bangladesh. The average duty on all iI+I§0Lt8d products from Bangladesh was amongst the highest in 2022, and the import tariff on clothing items from Bangladesh was even higher. As Bangladesh depends greatly on its access to foreign markets and the clothing industry remains the driving force behind our exports and economic growth, we urge the United States to consider duty-free access to apparel products made of US cotton. As Bangladesh has positioned itself as a major supplier of apparel in the world, there is a clear potential for the US cotton grower and exporters to further tap this market. Given our growth potential and duty-free import facilities of cotton in Bangladesh, the US cotton growers and exporters can further exploit opportunities if duty-free access is granted to apparel made of US cotton. Especially the proposed duty-free treatment will benefit U.S. cotton through increased demand and earning premium prices.

Duty-free access to clothing made in Bangladesh will also benefit U.S. consumers, especially the middle and lower-income groups for whom clothing and other essentials comprise a significant share of expenses. As the apparel items face the highest tariffs, the waiver will benefit for both U.S. consumers and its cotton growers in this difficult time. On a brighter note, we hope the global economy, retail business and trade will return in 2024 while the demand for cotton will increase. You are aware that the Government of Bangladesh is implementing several mega infrastructural projects which will add further competitive strength in near future. The Payra Port is expected to come into operation in 2024 and the Matarbari deep sea port is expected to be ready by 2026. Already direct shipping has started from Chattagram seaport and large container vessels are allowed now. With all these mega projects concluded, the time and cost of business will reduce further. This will make Bangladesh a more favourable market for US cotton growers and exporters. The requested duty-free treatment for apparel made of US cotton will add further momentum which will boost our bilateral trade and investment to a certain extent.