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Bangladesh wants tax only on value addition

RMG export to US
Miraj Shams
18 Sep 2023 21:38:14 | Update: 19 Sep 2023 18:57:04
Bangladesh wants tax only on value addition

In the seventh US-Bangladesh Trade and Investment Cooperation Forum Agreement (TICFA) council meeting, Bangladesh will urge the US to impose tax only on the value addition of RMG products made of US cotton instead of FoB prices.

In FY2023, Bangladesh exported $9.7 billion worth apparel goods to the US market, the single largest export destination for clothing items.

Besides, Bangladesh will again seek the duty-free market access to the American market and call for simplifying the registration process for pharmaceuticals products.

Talking to The Business Post, Senior Commerce Secretary Tapan Kanti Ghosh confirmed the agenda of the seventh TICFA council meeting to be held in Dhaka on September 20.

The TICFA council preparatory meeting was held at the commerce ministry on Monday. After the meeting, the senior commerce secretary said that Bangladesh will seek duty-free market access to US. It will get first priority at the council meeting as local importers have been paying one of the highest duties in the USA. As a result, Bangladesh’s exports to US fall gradually, he added.

Secondly, Bangladesh imports cotton from USA for producing apparel products. “We will seek duty benefit for apparel items which are exported to USA. Bangladesh will propose imposing duty only on value addition of US cotton products.”

Currently, US traders pay 15.62 per cent duty on import of garment products from Bangladesh, which is one of the highest.

Bangladesh will again urge United States Trade Representative (USTR) administration for giving duty-free quota-free (DFQF) market access to the USA market.

Ghosh said that they will raise the demand at the TICFA council meeting.

It will be co-chaired by Tapan Kanti Ghosh and Christopher Wilson, Assistant United States Trade Representative for South and Central Asian Affairs. The delegations included officials from trade, labour, agriculture, and other relevant ministries.

Tapan Kanti Ghosh said that they will seek investment from USA, especially in the primary energy sector. Another priority issue on USA international development finance corporation (DFC) for providing facilities will be enlisted in Bangladesh.

Bangladesh will also urge USA to extend support to get 6-year duty benefit at the next WTO ministerial meeting as the country is set to graduate from the LDC status in 2026.

At the TICFA meeting, the United States Trade Representative, the chief trade negotiating body of the US government, may raise issues like labour rights, intellectual property rights and other trade related issues.

On the other hand, issue relating to duty-free or reduction of duty on exports of goods to the US market will figure prominently at the council meeting.

During the meeting, Bangladesh and USA will discuss a wide range of issues impacting the bilateral trade relationship. These include preferential market access of Bangladeshi products, including DFQF access to Bangladeshi products from US cotton and simplified procedure for pharmaceuticals products registration. Other agenda includes labour rights, technical assistance, intellectual property protection, investment climate, digital trade policies, agricultural trade, customs and trade facilitation.

The two countries stressed the importance of their strong economic and trade relationship, which surpassed $10 billion in two-way trade in goods in 2021. Bangladesh’s exports to the USA declined by 6.88 per cent year-on-year to $9.70 billion in FY23. It was $10.42 billion in FY22.

Bangladesh and USA have formally engaged on trade issues since the US-Bangladesh TICFA entered into force in 2013. In December last year, the 6th round of the TICFA meeting was held in Washington. Before that TICFA meeting was held in Dhaka on March 5, 2020.