Tariff may drop if Bangladeshi exports contain over 20% US raw materials: USTR
Work is underway to ensure raw materials’ traceability, says the visiting US officials during meeting with BGMEA
A delegation from the United States Trade Representative's (USTR) office, currently in Dhaka, has said that Bangladeshi exports sent to the US may get lower tariffs if more than 20% of the goods' raw materials are sourced from the US, adding that the tariff reduction would apply only to that portion of the product.
While this is mentioned in the US executive order, the delegation noted that work is currently underway to determine how the traceability of these raw materials will be ensured.
The American delegation, led by Assistant USTR for South and Central Asia Brendan Lynch, shared the development during a meeting with the leadership of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in Dhaka today (15 September).
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The US Embassy in Dhaka organised the meeting at the Chief of Mission's Residence in the capital's Gulshan.
Following the meeting, a BGMEA press release said, "According to the US executive order, if garment products exported from Bangladesh contain over 20% US raw materials, then the 20% additional tariff imposed on those products will be proportionally waived."
BGMEA leaders inquired about the process or formula by which the use of US raw materials will be assessed and traceability ensured, according to the press release.
In response, the US delegation said that US customs is currently working on the issue. It is expected to be completed within the specified time.
Besides, the USTR delegation emphasised amending Bangladesh's existing labour law in accordance with International Labour Organization (ILO) guidelines.
Brendan Lynch recommended amending the Bangladesh Labour Act 2006 following ILO guidelines.
In August, the United States had reduced the reciprocal tariff rate for Bangladesh to 20%, down from the initial 35%.
However, according to BGMEA, even after this reduction, the total tariff on Bangladeshi ready-made garments in the US market remains 36.5%. They called for further reductions in the tariff.
BGMEA President Mahmud Hasan Khan Babu requested Assistant USTR Brendan Lynch to view the positive changes gradually being implemented in the country and industry in a constructive manner.
The BGMEA president said, "We have already achieved the 20% tariff benefit, which is a positive step. However, in reality, the total tariff on Bangladesh's exports to the US market is about 36.5%, creating a new challenge for Bangladeshi garment exports to the United States."
On this matter, the BGMEA president expressed that the 'stacking method' could be used to adjust tariffs with other products.
"This approach would not only reduce the tariff burden but also enhance the competitiveness of Bangladeshi export products in the US market."
During the meeting, BGMEA also explained their position regarding labour law reforms.
"The US trade delegation expressed satisfaction with the discussion and expressed optimism about increasing imports of Bangladeshi products from the US, reducing the trade deficit, and further lowering reciprocal tariffs for Bangladesh," the release said.
