RMG makers for diplomatic moves to win GSP+

Apparel exporters are seeking political and diplomatic efforts to remove obstacles in the way of realising GSP+ facilities from the European Union which will be available for the period of 2023 to 2034.

The European Commission (EC) in recent times proposed holding dialogue in this regard.

The commerce ministry, however, said it is very concerned over the issue and trying to arrange a meeting with the EC to remove obstacles, especially safeguard measures of HS code 61, 62 and 63.

The ministry also sent a letter to the commission in the middle of November, saying that the safeguard measures will highly affect Bangladesh’s apparel export.

As per the proposal, if the EU imports rise six per cent under the three HS codes -- 61, 62 and 63 -- which are relative to knitwear, woven and textile goods -- from any single country, that country will not be eligible for GSP+ facilities.

But the EU imports more than 9 per cent from Bangladesh under the HS code 61 and 62.

Besides, to gain GSP+ facilities, the EC proposed that export volume to the EU cannot rise above 37 per cent from the overall export, and that requires minimum 40 per cent value addition.

However, around 50 per cent of export earnings come from the EU countries while the value addition for oven products is around 20 per cent.

The EC also proposed rectifying 32 conditions to gain GSP+ facilities and Bangladesh has already addressed 31 conditions.

Bangladesh has been enjoying duty-free market access since 1973 under the EU generous scheme -- Everything but Arms (EBA) -- meant for the least developed countries (LDCs).

But after the LDC graduation in 2026, the country will have another three years, and after that for duty-free export, it must be eligible for GSP plus facility.

Apparel exporters said if the European Parliament approves the current proposal, they will not be able to export to the EU under the duty-free facility and will have to pay minimum 12 per cent tariff which will put them behind Vietnam which has already signed free-trade agreement with the EU.

Bangladesh Garment Manufacturers and Exporters Association president Faruque Hassan maintained that, “Initially, it will be impossible to get GSP+ if the EU approves the EC’s HS code and export threshold proposal.”

The apparel leader said the current GSP facilities will expire after 2029, and as part of their apparel diplomacy, they are trying to extend the facilities for at least up to the year of 2032-2033.

It is high time the government should start preparation to sign a free-trade agreement with the EU and other western countries for duty-free access, he observed, saying that“if we try in a body, there is nothing to be worried about”.

Mohammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association, told The Business Post to gain GSP+ a government-to-government and business-to-business negotiation is needed.

“The government will be able to solve such critical issue, or else, we will suffer and our export earnings will decline,” Hatem said.

According to the BGMEA and the BKMEA, currently, Bangladesh exported around 71 per cent cotton-based apparel products and knitwear of which the value addition was around 90 per cent.

On the other hand, the value addition of woven products is around 20 per cent and is on agradual uptick.

The industry insiders said the demand for man-made fibre products is rising globally, and its current market ratio is around 70 per cent to the total apparel market.

“But there is no absolute man-made fibre factory due to high establishment cost. So, we are lagging behind meeting value addition in woven sector,” BGMEA vice-president Shahidullah Azim told The Business Post.

Currently, some entrepreneurs are showing interest to set man-made fibre factory and it will help increase value addition, he opined.

“Considering huge investment and future crisis, we requested the government to approve 10 per cent incentive for man-made fibre products which would help us meet the EU condition within 2029,” Azim pointed out.

Government concerned over EC issues

The commerce ministry claimed that it is trying to reach EC through several channels to remove all barriers to getting duty-free access to European Union market.

The ministry involved commercial counsellor of the foreign ministry and also apparel exporters working with the Ministry of Commerce to help the government.

Md Hafizur Rahman, additional secretary (WTO cell) to the commerce ministry, said they are very concerned of the EC’s GSP proposal, and have already expressed interest to hold talks with them.

“In middle of November 2021, we sent a letter to the EC, asking them to remove safeguard measures. We also trying to hold a meeting with the European Commission, but are yet to get any feedback,” Hafizur told The Business Post.

“We have already met the EC conditions and are also going to meet some others. Bangladesh has improved in infrastructure and worker-safety index.”

If the commerce ministry is able to hold a meeting with the EC, the disputes should be addressed and the commission urged to withdraw safeguard measures, the secretary pointed out.