BGMEA seeks negotiation thru' US lawmakers for duty-free market access

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is seeking negotiation through American lawmakers to obtain duty-free market access to the US market for apparel made from American cotton.

The BGMEA plans to write to governors and senators of cotton-growing provinces in the USA to pursue their demand, with a list of targeted governors and senators already prepared, BGMEA President Faruque Hassan told The Business Standard. 

The letters are expected to be sent via email and hard copy through diplomatic missions in the USA by today, he added.

"In the letter, we have mentioned that Bangladesh has recently withdrawn the double fumigation condition on US cotton, and given almost zero duty (1%) import facility, which will help to grow their business in Bangladesh," said the BGMEA president.

"We also ask them if they will provide duty-free market access that will also benefit their farmers as they have to export about 90% of their total production", he added.

The BGMEA president also said that duty-free access to the American market for US cotton-made garments would be mutually beneficial for cotton growers and garment exporters. 

With the high inflation faced by the USA, granting duty-free market access for US cotton-made apparel would allow consumers to purchase the products at a lower cost as Bangladeshi apparel goods are subject to about 16% duty in the import stage in the USA.

Once the governors and senators have been informed, the BGMEA will write a similar letter to the Ministry of Commerce to negotiate with the US government and the US Embassy in Dhaka to convey the apparel exporters' arguments to the government, Faruque Hassan added.

Envoy Textile Limited's Founder Eng Kutubuddin Ahmed supported the BGMEA's move, stating that it would benefit USA cotton farmers, consumers, and Bangladeshi apparel makers. 

US cotton prices are 5%-7% higher than other cotton prices, but the quality of the cotton justifies its use, he noted, adding that textile millers using US cotton have a 20% advantage in increasing their efficiency compared to their regular production. 

The use of US cotton allows machines to run up to 1100 RPM (revolutions per minute), which is not possible with other cottons.

The Envoy Textiles founder further stated that due to the US-China political tension, the Bangladesh market could potentially be significant for US cotton in the coming days, especially if the USA grants reduced rates or zero-duty benefits on the export of apparel made by cotton. 

Cotton-using mills may provide certification for the traceability of their cotton use in this situation, observed Kutubuddin.

Matin Chowdhury, former president of the Bangladesh Textile Mills Association (BTMA), also backed the BGMEA's demand for a duty-free access to the US market for apparel made from American cotton, saying, "This demand is very logical, which arose about 15 years ago.

The USA has provided such a facility for Jordan, he mentioned adding that providing duty-free access for Bangladeshi apparel would help boost bilateral trade between the two countries.

Bangladesh cotton market scenario

In the marketing year 2021-22, Bangladesh's domestic raw cotton consumption was estimated at 8.8 million bales, according to a recent report of the US Department of Agriculture (USDA).

The report said the textiles industry was composed of yarn, fabric, and dyeing-printing-finishing mills and they have about 15 million bales of cotton consumption capacity.

Some 80% of the produced yarn is pure cotton while the remaining 20% is mixed yarn from cotton and artificial fibres.

The report also mentioned that Bangladesh has been showing a steady increase in cotton imports since marketing year 2014-15, with a dip in marketing year 2019-20 due to the Covid-19 pandemic.

Monsoor Ahmed, BTMA additional director and CEO (In Charge), said Bangladesh meets about 13% of its cotton demand through imports from the USA, which is gradually increasing. 

The Otexa data showed that Bangladesh's current share in the US market is about 9.8% (of the nearly $100 billion worth of clothing the US imported globally), meaning one in every ten garments exported to America from around the world originated from Bangladesh.

Bangladesh's apparel exports to the US have been growing steadily, despite not having duty benefits from the world's largest market, as its market share stood at 8.2% in 2020 and 8.8% in 2021.