Textile News, Apparel News, RMG News, Fashion Trends
News & Analysis

New canadian GPT and how it will affect Bangladesh RMG sector

About Canadian GPT

Canada’s General Preferential Tariff (GPT) regime offers lower-than-normal tariff rates for imports from developing countries. The GPT, and similar programs in the G-7 and other developed countries, aim to promote economic growth in developing countries. The GPT regime has not been substantively updated since its introduction in 1974. Economic Action Plan 2012 committed to undertake a comprehensive review of Canada’s GPT regime to ensure that it is appropriately aligned with the current global economic landscape and other major tariff preference-granting countries, and to target the benefits to countries most in need of this type of assistance. Economic Action Plan 2013 is taking action to modernize Canada’s GPT regime. The Government is proposing, effective January 1, 2015, to graduate 72 higher-income and trade-competitive countries (e.g. Korea, China, Brazil) and renew the GPT for another 10-year period. From now on, beneficiary countries will be reviewed bi-annually based on objective economic criteria to determine whether they remain eligible for GPT benefits. The modernized GPT regime will continue to promote economic growth and export diversification in developing countries by providing meaningful incentives for Canadian businesses and consumers to import from GPT eligible countries. This might affect Bangladesh as its imports lot of raw material for its garments from several countries that would be among the list of 72 graduating countries, including India, China, and Thailand.

Canadian GPT and where Bangladesh stands

Bangladesh’s garment sector would not be affected by the amendments being made by the Canadian Government in its General Preferential Tariff (GPT) rules and Rules of Origin. Heather Cruden, Canadian High Commissioner in Bangladesh ensured that Bangladesh as a least developed country (LDC) would be excluded from following imposition of general preferential tariff (GPT) by Canada. Canada would take steps to ensure that the benefits of the LDCT are not reduced by the changes to the GPT, Ms Cruden explained that, by adding this means the LDCT rules of origin requirements will be amended so that apparel producers will continue to benefit from duty-free access to Canada while using textile inputs from current GPT countries like China and India.

Possible action plan for Bangladesh regarding GPT

Experts and analysts think that as for now the Bangladeshi exporters need to study and understand consumer trends and maintain their competitive advantage to be successful in the Canadian market. Bangladeshi entrepreneurs need to develop products and markets, both new and existing, and the government needs to develop policy and institutional environment that can support in this regard. According to Canadian high commissioner, though Bangladesh has made strong progress in various areas, the current political instability is causing some companies to question whether they should diversify their risks and move out of Bangladesh. This could be very damaging in the medium and long-term for Bangladesh. Ms Crudden expressed her views and at a seminar on ‘Bangladesh Canada Trade and Economic Relations’ jointly organised by the Bangladesh Foreign Trade Institute (BFTI) and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) held at the beginning of September.

On the other hand the commerce minister of Bangladesh GM Quader believes that Bangladesh is a ground for good investment and changes in the government will not have any impact on foreign investment. Though Bangladesh-made products are destined only for four major destinations—the US, the European Union, Canada and Japan—it has very big potential to expand its trade with its partners. On a positive note Bangladesh’s exports saw a record growth in the first month of the current fiscal despite political disturbances.

Source: Dhaka Tribune.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

Latest Publications

View All