BGMEA urges Canada to take steps to neutralise impact of GPT review

Monira Munni Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has requested the Canadian government to take measures to neutralise or counterbalance the impact of GPT (General Preferential Tariff) review on the LDCs' (Least Developed Countries') duty-free apparel exports to Canada. The GPT review, as proposed, would lead to a major impact on Bangladesh's apparel exports to Canada which may lead to closing down of several hundred garment factories and dislocation of many jobs. The country's apex apparel body on January 15 submitted its opinion expressing concern on the proposed review of Canada's GPT and its impact on the specific Least Developed Country Tariff (LDCT) Rules of Origin (RoO) with specific regards to apparel exports to Canada. On December 22 last year, Canada announced to review its GPT regime for the developing countries. As part of the review, the Canadian government sought comments on proposed changes to the various elements of the GPT from all interested stakeholders by February 15. In the proposed review, Canada is going to withdraw its GPT facility for 72 developing countries, including China and India while Bangladesh is out of the list as an LDC. BGMEA in its submission requested three measures in order of priority saying Bangladesh will face the maximum impact of the proposed GPT review. "Canada should adopt the single-stage RoO for its LDCT similar to that of EU GSP (Generalised System of Preferences)," it said explaining Bangladesh's textile industry, including the export-oriented RMG (readymade garment) sector, is largely dependent on imported yarn and fabric. According to the RoO for the LDCs provided by Canada, an LDC will enjoy the duty-free facility, if it imports raw materials from the GPT-enjoying countries. The sourcing of the yarns and fabric for export-oriented garment industry in Bangladesh is concentrated on China, India and Hong Kong, all of which are proposed to be excluded from GPT. Bangladesh does not grow any cotton and its export-oriented RMG industry is dependent on imported textiles. As per the WTO statistics of 2011, Bangladesh is the eleventh largest textile importing country in the world; one of the highest textile importing countries among other LDCs in the world. The proposed GPT review may be a blessing in disguise for countries like India, China, Turkey, Indonesia and Taiwan as the GPT beneficiaries, as proposed to be removed, are paying 17-18 per cent duties for different items of apparel, whereas Bangladesh pays zero per cent tariff under LDCT. Therefore, the withdrawal of GPT would not lead to any tariff increase for these apparel exporting giants, rather it would increase tariff for Bangladesh from zero per cent at present to 17-18 per cent. The proposed review is aimed to align the core objective of Canada's trade preferences with targeted developing and least developed countries. But the standalone review of GPT without subsequent adjustments in LDCT would ruin the purpose by awarding the non-beneficiary countries with a fresh margin of 17-18 per cent over the LDCs, the BGMEA submission explained. Bangladesh has been enjoying complete duty-free and quota-free access in Canada since January 1, 2003 under the LDCT scheme which is a subgroup of GPT. Bangladesh's apparel exports to Canada was worth $ 86.17 million in 2002 which stood at $ 951.98 million while woven accounted for $ 491.24 million and knit products for $ 460.74 million in 2011. Over the past 10 years Bangladesh's apparel export to Canada has grown by more than 11 times making it a substantial source of growth for the country's apparel industry. Trade in general, and especially exports of apparel, is a central element in the Bangladeshi development strategy. So the GPT review as proposed would lead to a major impact on the apparel exports to Canada, which may lead to closing down of several hundred garment factories and dislocation of many jobs, it added. "If the single-stage RoO is not possible, then Canada should allow regional cumulation facility. For Bangladesh it should be APTA and SAARC." The BGMEA said Canada should grant 25 per cent value added rules of origin with provision of cumulation of rest 75 per cent value added from unidentified origin(s).