Use of raw materials from the United States will allow Bangladesh to get some extra tariff exemptions, said Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) on Saturday.
At a press conference held at the BGMEA office he also said: “About 75% of our US exports are cotton-based garments. The executive order on tariffs states that if at least 20% of American raw materials (such as American cotton) are used, then this additional 20% tariff will not be applicable to the value of American raw materials. That is, if we use American raw materials, we will get some extra tariff exemptions.”
For instance, if 20% of the cotton used in garment production is sourced from the US and the finished products are then exported to the US, the tariff will be reduced based on the value of the US cotton used, he explained.
But he also warned: “Another thing I would like to say that we have no room for complacency, because the latest US executive order clearly states that US trade or security agreement negotiations are still ongoing with some countries, which, if executed, may further reduce the tariffs of these countries. Therefore, Bangladesh has to continue the negotiations.”
He further explained: “Earlier, we used to pay Most-Favored Nation (MFN) tariffs at a rate of 16.5% to export garment items from Bangladesh to the US. Now, the additional 20% reciprocal tariff that has been determined for Bangladesh has brought our total tariff rate to 36.5%, which will be applicable at different rates for different products.”
BGMEA is also seeking government help in this situation.
Mahmud Hasan said: “The 20% tariff on Bangladesh's exports will inevitably increase the cost of production of our products, where industries are already fighting a desperate battle to keep pace with the rising cost of production. In this regard, the government must also take a proactive stance. The government must keep a close eye on small and medium-sized factories, especially those that are not driven out of business.”
“We sincerely hope that all the government's policy support will continue in the interest of the industry and the country, the efficiency of all the relevant departments including the NBR will increase, especially the customs-related policies will be industry-friendly, the efficiency of the Chittagong Port will increase, and the industry will get uninterrupted electricity and gas supply,” he added.
