CPD RMG Study Stitching a better future for Bangladesh
Published in New Age on March 15, 2018
Photo: New Age
Looming global trade war may affect Bangladesh’s economy and trade particularly exports as the US administration under president Donald Trump is planning to impose additional tariffs on apparel imports.
After imposing tariffs on imports of a number of products from different countries, the world’s biggest economy is now planning to impose tariffs on up to $60 billion of Chinese imports targeting apparels, footwear, and technology and telecommunication sectors, according to a Reuters report.
Experts and economists said that tariff imposition on readymade garment items would hurt Bangladesh’s export to the US market if the tariff was imposed indiscriminately on all countries.
Though the US has kept some countries out of the new tariffs imposed on different products, it does not seem sure whether the tariff on RMG products would be imposed only on China or on all countries, they said.
The USA has already imposed additional tariffs on different products including steel, aluminium and solar panel eying China, and paper and lumber targeting Canada by up to 30 per cent.
European Union, China, Canada, Japan and some other big countries have already warned the US of retaliation through imposing tariffs on US products if they are not exempted from the tariffs.
The EU has threatened to slap tariffs on products like Harley-Davidsons, Kentucky bourbon and bluejeans as revenge if the US doesn’t exempt the bloc from tariffs on steel and aluminium imports.
The US also issued warning of counter retaliation by imposing tariffs on EU vehicles targeting Germany if the EU does so.
The recent developments indicate that a serious global trade war is looming large as different economic blocs and countries will also follow trade protectionism if the US doesn’t retreats from its stance.
Centre for Policy Dialogue distinguished fellow Mustafizur Rahman on Wednesday told New Age that global trade war would be bad for the global economy and trade.
What would be the impact of the possible tariff on apparel products on Bangladesh would depend on how the US imposes it, he said.
Bangladesh’s export will be affected if the tariff is imposed on all countries, he said.
‘If the tariff is imposed only on China and other big countries, Bangladesh may be benefited,’ he said.
He, however, said that Bangladesh’s export might not be hurt so much even if the tariff was imposed on all countries as the US doesn’t have production of products Bangladesh exports to the market.
Demand for RMG items may decline little as the prices of the products would go up due to the probable tariff, he anticipated.
Mustafiz, however, hoped that affected countries would challenge the US moves at the World Trade Organisation’s dispute settlement mechanism and the US finally would be forced to withdraw the tariffs.
He suggested that the Bangladesh government should remain vigilant.
Policy Research Institute executive director Ahsan H Mansur echoed Mustafiz’s views about the issue, saying that the impact would depend on the manner of imposition — whether the tariff would be imposed indiscriminately or not.
The tariff may be only on China and few other countries if the US imposes it on anti-dumping ground, he said, adding that the tariff might be imposed on all countries if it is imposed on other grounds.
‘Bangladesh’s export may be affected negatively if our goods also become subject to additional tariff,’ he said.
On the other hand, Bangladesh’s export may be benefited if the tariff is imposed only on China or few other countries, he added.
Exporters Association of Bangladesh president Abdus Salam Murshedy said that imposition of tariff by the US would be a matter of concern for Bangladeshi apparel exporters as they were currently paying around 16 per cent duty in the market.
‘We don’t know whether Bangladesh would be a victim of the planned tariff,’ he said.
Murshedy hoped that the US would not put additional tariff burden on countries like Bangladesh.
