Bangladesh, which secured a 20 per cent tariff rate with the US, is hoping to edge out India by taking advantage of India’s higher tariff rates. They believe Bangladesh would now have access to the gap in the US market left by China, which otherwise would have been filled by India.
Bangladesh’s interim government secured a trade deal with the US, a country on which its apparel sector is heavily dependent. Its competitors, Sri Lanka, Vietnam, Pakistan, and Indonesia, received rates between 19% and 20%, which meant that Bangladesh’s market would be relatively unaffected.
Exporters believe that with the latest tariff structure, Bangladesh has an opportunity to exploit the US market for Bangladeshi ready-made garments, home textiles, handicrafts, and agricultural products.
Mohiuddin Rubel, former director of the Bangladesh Garment Manufacturers and Exporters Association, told Bangladeshi local media that the decision is largely good news for Bangladesh. “As the US is likely to lose the Chinese market, India was initially seen moving forward to fill that gap. But now that a higher tariff has been imposed on India, the US buyers can now consider Bangladesh as an alternative to China,” Rubel added.
Exporters from Chittagong claim that due to high tariffs on products from China and India, they are receiving many FOC (Free of Cost) orders (purchase orders) that were previously imported from the two countries. India’s high tariff rates have brought a lot of customers to Chittagong, they say. "This has brought relief to Bangladesh's garment exporters. We can take advantage of tariff differences with rival countries. Now, a lot of buyers are coming here (to Chittagong). They want to place orders here," SM Abu Tayyab, an exporter, told Jago News.
Urging cooperation from the interim government, they said the move will help increase foreign exchange earnings. “Vietnam or India do some high-category work, which has a very high FOB (free on board) value. Some cooperation from the government is needed in terms of investing in new technologies. Especially, long-term investment cooperation along with low interest rates is needed. This will give us the opportunity to do more new types of work in the garment sector," Sakif Ahmed Salam, a Bangladeshi exporter, added.
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However, economists are apprehensive about the agreement between the governments. According to Syed Ibrahim Ahmed, assistant professor, American International University-Bangladesh, the general public does not know what agreements the interim government (NDA) has accepted. “But if this government has given any additional benefits, the future elected government and the people of the country may have to pay for it against inflation and rising commodity prices. It is only desirable to hope that there is no depreciation of the currency and reserve deficit to sustain the garment industry,” he wrote in the Bangladesh Times.