American buyers have been mounting pressure on the Congress for renewal of GSP (generalised system of preferences) as they are compelled to pay higher taxes for importing Bangladeshi goods since expiry of the facility in July 2013, trade diplomats have said.
The Bangladesh embassy in Washington informed the Ministry of Commerce (MoC) in Dhaka this week about the updates regarding the impact of expiry of GSP facility on American buyers.
The US government suspended the GSP facility for Bangladeshi products in July 2013 following deadly Rana Plaza collapse and fire incident in Tazreen Fashions citing serious shortcomings in workplace safety and workers' rights.
At the same time, the tenure of GSP scheme itself also expired which is yet to be renewed by the US government.
The embassy officials, citing various sources, informed the MoC that since the expiry of tenure of GSP scheme, the US companies have paid an estimated US$800 million in higher taxes until August this year.
"If GSP expiration drags into 2015, companies will pay hundreds of millions of dollars more in higher (and unnecessary) taxes, bringing the total cost of expiration to more than $1.0 billion," a pressure group namely 'Renew GSP Today' said in its website.
It also said American companies now face an estimated $2.0 million per day in new taxes. They paid $58 million in August 2014 alone due to non-renewal of GSP scheme.
The group also cited about sales loss of companies leading to job and benefit cut of workers in the USA.
Citing a recent survey on 240 importers, the group said workers in one of eight companies were laid off because of expiry of GSP scheme. "More than 40 per cent (of them) delayed hiring new workers, and 22 per cent reported benefit cuts such as reduced retirement or healthcare benefits, reduced or frozen salaries, or cancelled bonuses."
Last month in a report titled 'Lost Sales, Investments, and Jobs: Impact of GSP Expiration After One Year', the Coalition for GSP, another pressure group, portrayed the impact of GSP expiration on more than 200 companies. The report shows that delayed renewal is forcing companies to take drastic actions.
Citing an example, it said, Matrix Metals, a US company, laid off 75 workers at facilities in Iowa and Texas, while Vispak LLC in Minnesota is going out of business completely.
The report talked about further urgency to the need for Congress to renew GSP immediately. It said most companies have suffered higher costs and sales loss because of GSP expiration.
When contacted, a senior MoC official told the FE Monday GSP suspension for Bangladeshi products to the US market has put a significant negative impact on export growth.
He said the government of Bangladesh has been doing its best to follow the action plan forwarded by the US government after the suspension of the GSP scheme.
The official said commendable progress has been achieved in ensuring workplace safety and workers rights and the government is expecting withdrawal of the GSP suspension shortly.
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