The revised Rules of Origin (RoO) adopted by the European Commission, effective since 1 January 2011, allows Bangladesh to continue enjoying EU’s Generalised System of Preferences or GSP advantages even for the imported primary materials like fabrics. According to the new rules at least one production process must be completed in Bangladesh to be accepted in the EU as product of Bangladesh.
These rules apply not only to the textile products but also for any product but arms for export to the EU market.
In contrast to the EU, the USA does not provide duty-free access for Bangladesh although they enjoy most influence on Bangladesh, almost in every matter. Most recently the USA is using its power to pressurise Bangladesh threatening “an effect on bilateral relations” in matters such as who should remain chief of the Grameen Bank even when the case is pending at the highest court of Bangladesh.
Mr. Gowher Rizvi, international affairs adviser to the prime minister of Bangladesh made some unusual but clear comments at a luncheon meeting on 22nd March 2011 while the President of American Chamber of Commerce in Bangladesh threatened US-Bangladesh ‘tension’ (about the same matter) to hurt trade. Mr. Gowher Rizvi said that there were some pending issues with the US, like duty-free access of Bangladeshi products to the US market. Bangladesh paid $500 million in duties to the US government for exporting goods worth $4 billion last year, reports the daily star on 23rd March 2011.
Textiles and clothing products are subject to 12% duty in the EU. As per GSP rules Bangladesh is exempt from this duty, while India and China must pay 9.6% and 12% duty respectively. Since beginning of 2011 knit export to the EU market has increased sharply, particularly due to the new RoO rules. Now, more than 70% of total knit export from Bangladesh is shipped to one of the EU member countries. These trends are expected to continue.