Bangladesh opens door to private air cargo operators in logistics push
In a move designed to tackle chronic congestion and delays in airfreight exports, Bangladesh will ...
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Bangladesh seems to have gained the upper hand in the shifting US tariff/trade policy towards its sourcing partners in Asia.
Under the framework of a new reciprocal tariff pact announced this week, Bangladeshi apparel exports to the US will face a reduced flat tariff of 19%, down from the 20% previously agreed.
But the bigger gain comes from another concession: garments made from US cotton and man-made fibres will be tariff-free.
That could put the Bangladesh apparel industry on a stronger footing than its Indian counterparts facing the lowest tariff in the South-east Asian region, 18%.
Taking into account the MFN (most favoured nation) tariff commonly applied, the net import duty on US garment imports would work out to 31% for India and 30% for Bangladesh, while the Indian trade deal offers no “zero-tariff” provision.
Additionally, Bangladesh is historically a low-cost location for production, giving its exporters greater margin headroom. Thus industry sources believe Bangladesh should be able to offer cheaper ready-made garment (RMG) products in many high-volume categories to the US.
However, it’s not easy for Bangladesh garment manufacturers/exporters to convert the “zero=tariff” option into reality, as sourcing US cotton would involve additional logistics costs and delays.
“There are tariff structural vulnerabilities on both sides,” one industry expert told The Loadstar.
Bangladesh is the second largest ready-made garment (RMG) exporter to the US, after China, and holds market share more than double that of India’s trade with the US in that segment, but its supply chains are navigating a series of challenges due to ongoing political/economic turbulence.
The latest example: all operations at Bangladesh’s main cargo gateway, Chittagong Port, were suspended following strike action by workers. The port has resumed work, but disruption threats persist.
Meanwhile, India’s apparel and textile exports to the US have suffered deep cuts in recent months due to tariff issues – a sharp decline of 31% in November year on year, according to available data.
With the lowering of tariffs, industry stakeholders were hoping to regain export pace, describing the India-US trade deal as a “historic milestone” for the sector that “will greatly strengthen the global competitiveness of the Indian textiles and apparel sector, firmly establishing India as the most reliable and trusted sourcing hub worldwide,” said A Sakthivel, chairman of India’s Apparel Export Promotion Council.
“This will also address the issue of non-tariff barriers to trade and reduce the compliance burden and procedural delays leading to the faster movement of goods to the US market,” he added.
SC Ralhan, president of the Federation of Indian Export Organisations, added: “Sectors such as engineering goods, textiles and apparel, pharmaceuticals, chemicals, leather products, gems and jewellery, and agricultural products are expected to gain significantly from the tariff rationalisation.”
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