Exports of our ready-made garments (RMG), the poster child of Bangladesh's economic might, have been facing a fresh setback after the imposition of the latest Indian non-tariff barriers like prohibition of RMG exports through land ports on May 17.
Earlier Indian government revoked the transshipment facility for Bangladeshi goods by using Indian land customs stations, ports, and airports to export goods to third countries. India made this decision early last month preventing Bangladeshi exporters from utilizing Indian routes for their shipments to other nations. The move had impacted the flow of Bangladeshi goods, particularly readymade garments, through Indian gateways.
Indian one after another restrictions on Bangladeshi products have been imposed amid US announcement of 37 percent additional tariff mainly on our garment exports. The new US tariff was initially slated to take effect on April 9 but suspended for a 90-day span.
Understandably, this pause provided a crucial window for Bangladesh to negotiate better trade terms and ensure timely shipments. After the suspension period, the new tariff is expected to be re-imposed, but the exact date of its effectiveness is not explicitly stated until now.
Consequently, orders for Bangladeshi exports to the US market has already plummeted after the recent announcement of tariff hike as American buyers reportedly have either cancelled or delayed some of the work orders. Even some buyers have demanded price discounts if the announced tariff takes effect.
Meanwhile, taking advantage of the 90-day suspension period, interim government has been trying to ease US trade restrictions through various measures and channels. Evidently, Dhaka has decided to offer zero import tariffs for another 100 US goods in addition to the existing 190.
No doubt, this move was aimed at minimizing the trade gap and addressing the US's reciprocal tariffs. As a result, US export of cotton to Bangladesh is expected to shoot up significantly as the latter is one of the largest importers of this item form the US for the manufacture of its garment products.
In the case of Indian restrictions on Bangladeshi products, the Bangladesh Knitwear Manufacturers Association recently called on the interim government to take diplomatic demarches in order to resolve the trade impasses with the Delhi government. RMG producers stressed the importance of opening the Indian land ports for Bangladeshi garments and other goods as these ports play a vital role in facilitating bilateral trade between the two countries by reducing transport costs significantly.
According to a source, about 80 per cent of our export activities have been completed through Benapole land port in the last ten months with ready-made garments accounting for Tk 12,811 crore. This is why if the ban remains in place, more than Tk 8,000 crore of trade will be at risk and economic losses for Bangladesh will be huge.
In this crucial time of our export trade, interim government should swing into actions to shrug off uncertainty by initiating trade negotiations with our global partners.
