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Bangladeshi
apparel exporters will only be able to fetch
limited benefits from the SAFTA (South Asian
Free Trade Area) accord, cautions a leading
international trade expert of Bangladesh.
“I don't think that local apparel exports will
receive a major boost as a result of the SAFTA,”
Professor Mustafizur Rahman, Research Director
of a private sector think-tank, the Centre for
Policy Dialogue (CPD), told the Cotton
Bangladesh in an exclusive interview.
Professor Rahman observed that all the SAFTA
member countries have put various apparel items
in their respective negative lists. This will
bar local RMG exporters from getting
preferential market access to the regional
market for those items and will constrain the
desired benefits from the SAFTA accord which
became operational from the first of January,
2006.
However, Professor Rahman felt that a window has
opened for the local exporters to enter the
Indian RMG market under the 'limited market
access' that India has accorded to Bangladesh in
the form of a tariff rate quota. The biggest
South Asian economy will import six million
pieces of apparel from Bangladesh each year,
duty-free, with the condition that the sourcing
of the fabrics should be of either Indian or
Bangladeshi origin. This quota was increased by
another two million pieces at the time of
ratification of the accord by the Indian
cabinet, he informed.
Professor Rahman however cautioned about some of
the non-tariff barriers that the exporters have
to face whilst exporting to India. He said there
is no firm clause in the SAFTA ensuring that
Bangladeshi businessmen will not face non-tariff
barriers in the form of surcharge, state tax and
luxury duties. It was important that these were
not imposed on Bangladeshi exports if the
exporters are to benefit from the accord.
Talking about Bangladesh's frustration in not
having been able to attain the duty-free,
quota-free (DF-QF) market access from all
developed countries, for all products, at the
time of the sixth Ministerial Conference of the
World Trade Organization concluded in Hong Kong
in December last year, Professor Rahman stated
that the US (and partly, Japan) was not ready to
give full market access to Bangladesh.
In the WTO agreement, the all important annex on
special and differential treatment provided for
duty-free and quota-free market access on a
lasting basis to at least 97 percent of LDC
products from some of the developed countries
which found it difficult to provide 100% DF-QF
market access. This would be 'defined at the
tariff line level, by 2008 or no later than the
start of the Doha Round implementation period'.
The rest three percent would be gradually phased
out of restriction 'taking into account the
impact on other developing countries at similar
levels of development'.
“The reason was that the US was not ready to
provide the benefit to Bangladesh at the moment
was that it perceived Bangladesh's RMG to be
highly competitive,” said the CPD Research
Director, who was one of the members of the
government negotiating team for the Hong Kong
Ministerial.
Professor Rahman went on to say that the
domestic textile/apparel lobbies of the USA
opposed the DF-QF proposal and some AGOA
(African Growth and Opportunity Act) beneficiary
African least developed countries (LDCs) were
also not supportive of Bangladesh. He also
expressed his frustration that SAARC member
countries such as Pakistan and Sri Lanka had
also opposed DF-QF market access to LDCs on the
ground that they thought this might adversely
impact on their export of apparels to certain
developed countries, mainly the USA.
According to the expert, the three percent
tariff line in the United States would include
about 339 products -- enough to cover all of
Bangladesh's textiles exports, possibly the
entire range of exports to the US market.
According to Professor Rahman, Bangladesh still
has an opportunity to benefit from the limited
market access to the US. US was yet to prepare
the list of items which were to get the DF-QF
facility and those that would not. He noted that
as per the concluding statement of the Chair at
Hong Kong Ministerial Conference the 'exclusion'
list was to be prepared after consultation with
the LDC governments.
During these consultations “the government has to try
its best to include some of the textile and
apparel products in the positive list of USA;
these were scheduled to be held in 2006 in
Geneva,” he said. Efforts will also need to be
taken for speedy phase-out of the exclusion
list, he added.
Professor Rahman emphasised on the need for
product diversification to in order to reap the
potential benefits. “I think the USA may include
some apparel items in the 97% list which
Bangladesh is exporting to the US at the moment,
albeit at a very low volume. Local exporters
have to strengthen their capacities in
manufacturing those items and export more of
those by taking advantage of the duty-free
treatment.”
Dr. Rahman stated that in the EU and most other
developed countries Bangladesh will get DF-QF
facility on all items under WTO discipline as of
January, 2008 (or the end of the Doha Round
negotiations). Although Bangladesh had been
receiving such treatment previously under the
various GSP Schemes, the Ministerial decision
will give predictability and certainty to our
exporters. Besides, the WTO accord also talks
about flexibility of the rules of origin, and if
this is implemented in good faith, the
opportunity to access the facility on the ground
will go up.
Professor Rahman also maintained that the
government should take urgent initiatives to
develop infrastructure facilities including
port. “Without such measures Bangladesh will not
be able to extract the desired benefits from the
SAFTA accord and the WTO Ministerial decision,”
he said.
‘DF-QF market access is a good opportunity, but
we have to do our own homework in strengthening
our supply-side capacities', he concluded. ¨
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