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New Partnership for Development Act 2007 (NPDA) and duty free access to the US market for Bangladesh

After the European Union (EU), the United States is the second biggest market for the RMG of Bangladesh, the main export product of the country. Comparison with other export sector has always been drawing a pleasant conclusion in favor of this big and emerging sector of Bangladesh Economy. Bangladesh is trying to get duty free access to the US market for quite a long time. Actually the policy of the US government to give market facility to few countries found to be discriminatory. The USA has not given any market facility to Bangladesh, Nepal and Maldives yet.

Export Promotion Bureau (EPB) and Bangladesh Bank
Source: Export Promotion Bureau (EPB) and Bangladesh Bank

 The tax rate that the US applied on the imported items from Bangladesh is discriminatory. The comparison table is given here:

EPB and Bangladesh Bank
Source: EPB and Bangladesh Bank

UK and France is paying less tax despite the fact that they are much more developed and affluent than Bangladesh and other LDCs.

Bangladesh Garments manufacturers and Exporters Association (BGMEA), Bangladesh Knit Manufacturers and Exporters Association (BKMEA), many national and international agencies are campaigning to provide duty free access to the Least Developed Countries (LDCs) including Bangladesh in US market. Hence, influenced by the effort and campaign for duty free access in US a bill has been placed recently in Congress.

The new NPDA bill has been placed in the House of Representatives of the US congress on October 19, 2007. Jim McDermott placed the bill which proposed duty free access for all products of the least developed countries (LDCs). Nobel laureate Prof. Muhammad Yunus testified in favor of the bill in-front of the senate committee of US congress and urged United States to extend duty free access to all goods imported from LDCs, particularly for Textile and Apparel imports for Bangladesh. Free access of products of the developing and LDCs to the market of developed countries is one of the top agenda of the world Trade Organization (WTO).

The bill mentioned Bangladesh and Cambodia as significant RMG exporters and kept some restrictive provisions for them for exporting few items to the USA. Restrictions have been imposed for eight categories of garment items and the bill proposed a fixed quantity of these items will get duty free access till 2009 to 2019.But this can be increased at 15% per annum if the countries can improve in few grounds including the quality of labor. This is a contradictory restriction for real duty free access because that eight category items comprise two thirds of export of RMG by Bangladesh. Bangladesh will have to compete against China as the quota restriction for exporting RMG for China will no more from 2009. As price reduction is not possible a real duty free access can only help Bangladesh to fight against China.

Without the provision for local value addition of 35%, the bill proposed another weird proposal that the beneficiary country has to treat both local and foreign investment equally, which means Govt. has to provide incentives to the foreign including US companies for investing in Bangladesh.

Several institutional bodies are opposing against the proposed bill. American Federation of Labor and Congress of Industrial Organizations (AFLCIO), some lobbies supporting Africa and National Council of Textile Organization said they would not support duty free access. AFLCIO pointed to the established labor unions and quality improvement of labor. Some senators also opposing the bill stating that free trade has not been good for US though experts and academics opined American consumers are getting benefit from it.

Meanwhile BGMEA Lobbyist firm, Sorani Samet & Associates in the US has asked Bangladesh Foreign Ministry to play active role in pursuing the House of Representative to pass the NPDA 2007. With response to this the Government of Bangladesh formed two task forces under the Commerce Ministry to pursue the passage of NPDA 2007.Both the committee have been assigned to conduct separate studies on ways to obtain duty free access of Bangladeshi products to the US market. BGMEA expected that this bill will help to reach their target of export worth US$ 15 – 18 billion in next 3 years. Bangladesh, fighting against natural calamity, corruption and poverty deserves better treatment from the US. This message must be reached.

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