Diversify trade with the US

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Offline fatema nusrat chowdhury

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Diversify trade with the US
« on: February 25, 2015, 03:21:14 PM »
The US should allow a duty-free, quota-free facility to the least developed countries in addition to giving the facility to the developed countries like the EU-27, Japan and Canada.

Trade facilitation is stronger than aid, said Dr Sadiq Ahmed, vice-chairman of Policy Research Institute (PRI), in an exclusive interview with The Daily Star yesterday.

He said the developed countries should facilitate trade rather than disbursing aid to the least developed countries (LDCs).

The average duty for the entry of goods from the LDCs to the US is more than 15 percent, which is too high for sustainable export growth.

The US has the right to fix higher duties to protect their own industries, but it is too high for some countries.

He said Bangladesh has been trying to get a duty-free facility to the US for several years now, but it was not allowed by the US government. However, Bangladesh should move along with the other LDCs to pass the bill, he added.

The US can either permit the duty-free access or bring the slab down to at least 10 percent for trade facilitation for the LDCs, said Ahmed, who served as World Bank director for nearly three decades in Washington.

The US is currently the single largest importer of Bangladeshi garment items -- 26 percent of total RMG exported last year.

He said Bangladesh should also not always pursue getting privileges in trade, but diversify its products from the ready-made garment (RMG) products.

“Bangladesh should not spend all its energy in lobbying a duty-free and quota-free access to the US market.”

“We should rather try to increase our export to the US market. Trade surplus with the US in fiscal 2010-11 was six billion dollars, which includes $4.5 billion in RMG export and $1.5 billion as remittance,” he added.

“We must try to increase the figure to 10 billion by diversifying the exportable products,” he said.

Suggesting export diversification, Ahmed said Bangladesh can allow foreign direct investment (FDI) in high-end garment and textile products as the country is mainly strong in the basic garment segment.

Moreover, Bangladesh can manufacture spare parts and technical gadgets for bigger companies, he said.

For example, world famous computer DELL and APLLE have manufacturing plants in China, the largest apparel supplying country.

To attract more FDI, Bangladesh needs to improve the power situation and infrastructure.

The government should also ease policies, lower the tariff structure and the tax and customs systems to attract greater FDI in the country. The private sector also has a role to play for more FDI, he said.

“Bangladesh should fight to create an investment friendly environment. Trade facilitation is necessary to create trade.”

If the government does not sign the Trade and Investment Framework Agreement (TIFA) with the US, it should improve other sectors, like reducing child labour, giving proper benefits to the workers, removing trade barriers and improving the infrastructures, he added.

“All these efforts may create an investment friendly environment, where FDI inflow might increase,” he said.