'Additional tariff on Bangladeshi clothing may increase apparel price in global market'

The imposition of tariffs on Bangladeshi clothing, following its transition from the list of Least Developed Countries (LDC) status, has the potential to elevate apparel prices in the global market, Mohammad Adbur Razzaque, chairman of the Research and Policy Integration for Development (RAPID) Bangladesh, said on Sunday.

Razzaque underscored Bangladesh's significant shares in the apparel markets of the European Union and the UK, standing at 22% and 18%, respectively.

He said, "Any disruption in Bangladesh's garment exports could hinder the immediate increase in supply to the global market. Consequently, the imposition of tariffs on Bangladeshi products post-LDC graduation is anticipated to escalate clothing prices globally."

Presenting a study paper titled "Can Bangladesh Absorb LDC Graduation-Induced Tariff Hikes? Evidence Using Product-specific Price Elasticities of Demand and Markups for Apparel Exports to Europe" at a seminar organiSed by RAPID in collaboration with the International Growth Center, Razzaque highlighted the dynamics of the situation.

He said, "Brands currently retain a portion of Bangladesh's Ready-Made Garments' (RMG) duty-free benefits as profit. If Bangladesh is required to pay duties after LDC graduation, brands may be compelled to reduce their profits, resulting in an increase in garment prices."

Razzaque urged negotiations with the European Union to preserve existing benefits even after LDC graduation.

The study paper emphasised strategies such as increasing the export of high-value added products, fostering a robust backward linkage industry, and enhancing the export sector's capacity to cope with the potential duty shock.

The paper also acknowledged the ease with which clothing products from Bangladesh are available in the world market. Importers can readily source these products from other countries, potentially leading to a decrease in demand for Bangladeshi products.

During the seminar, Sharifa Khan, Senior Secretary of the Economic Relations Division, Tapan Kanti Ghosh, Senior Secretary of the Ministry of Commerce, and Dr. Mostafa Abid Khan, advisor of the Bangladesh Trade and Tariff Commission, shared their insights on the matter.