Key Highlights:
- Bangladesh wants the US to allow duty-free, quota-free entry for its garments made from US cotton
- BGMEA seeks US help to set fair minimum apparel pricing
- The US urged Bangladesh to improve labor rights, fire safety, and building standards through the ‘Bangladesh Labor Action Plan’
The US and Bangladesh reaffirmed their dedication to cultivating a favorable environment for bilateral trade, tackling trade barriers, and fostering mutual economic prosperity between the two nations. The topics addressed in the recent TICFA gathering underwent thorough review, with each party articulating their respective positions.
Of particular significance were the deliberations on labor reforms, and the discussion on duty-free, quota-free access and registration of pharma products.
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The decision comes from the 8th Bilateral Trade and Investment Cooperation Forum Agreement (TICFA) Council Meeting between the United States and Bangladesh convened on April 22, 2024. Co-chaired by Brendan Lynch, Acting Assistant United States Trade Representative for South and Central Asia, Masud Bin Momen, Foreign Secretary of Bangladesh and Tapan Kanti Ghosh, Secretary of Bangladesh’s Ministry of Commerce, the meeting emphasized the deepening economic bonds between the two nations.
Bangladesh Pitches Duty-Free US Cotton Garment Access
Amongst various demands, the Bangladesh government has pressed the US to grant tariff-free and quota-free entry to Bangladeshi garments crafted from US-grown cotton. Tapan Kanti Ghosh, speaking to reporters post-meeting, highlighted the enhanced compliance of Bangladesh’s garment industry compared to the past. “Representing impoverished communities, these workers deserve improved living standards,” Ghosh emphasized, urging the US to provide duty-free access.
Drawing parallels with the US’s treatment of products from Least Developed Countries (LDCs) in Africa, Ghosh advocated for similar benefits for Bangladesh. He underscored the government’s efforts to enhance labor conditions and enact essential legal reforms in the garment sector. Considering these advancements, Ghosh emphasized the need for Bangladeshi apparel to enjoy tariff-free and quota-free access in the US market.
Granting duty-free access to US cotton products could result in significant savings for US importers of Bangladeshi garments, estimated at least $1.55 billion. The ready-made garment (RMG) exports in the initial two months of 2024 surged to $9.47 billion, reflecting a robust 13.2% year-on-year growth. This upward trajectory is anticipated to persist, potentially driving up the import demand for raw cotton.
In 2023, the United States exported cotton valued at US$339.21 million to Bangladesh. With duty-free access, there’s potential for this figure to soar even higher.
Duty-Free Access Impact on US Importers
- Estimated Savings: $1.55 Billion
- RMG Exports (Jan-Feb 2024): $9.47 Billion
- US Cotton Exports to Bangladesh (2023): $339.21 Million
BGMEA Presses Washington for GSP Revival, Garment Inclusion
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has reached out to the US government, seeking cooperation to establish fair minimum pricing for apparel and a standardized code of conduct for social audits. Additionally, they have urged the US government to reinstate the Generalized System of Preferences (GSP) for Bangladesh and include garment items in the program.
Key labor market indicators such as the Labor Force Participation Rate (LFPR), Unemployment Rate, Employed Population, Crude Activity Rate, and Female Labor Force Participation Rate offer insights into the labor market’s condition. Furthermore, Bangladesh saw a notable improvement in labor productivity, with a year-on-year growth of 5.11% in December 2022, compared to 3.51% the previous year.
Labor Reforms: A Top Priority
During discussions, delegates from the US Trade Representative (USTR) acknowledged Bangladesh’s strides in labor sector improvements but highlighted areas necessitating further enhancement, including amendments to the Bangladesh Labor Act (BLA).
The United States has urged Bangladesh to implement stricter measures concerning labor rights violations, fire safety, and building standards. These measures include increasing fines and other penalties, appointing inspectors with broader authority, and ensuring accountability for those involved in violence or harassment against union organizers and workers.
This call to action is outlined in an 11-point plan known as the ‘Bangladesh Labor Action Plan’ aimed at enhancing labor conditions in the country. The US emphasized the need for Bangladesh to take concrete steps to prevent and prosecute acts of violence and harassment against union members and to drop or resolve criminal charges against labor activists.
Furthermore, the US called for holding factory owners, management, and individuals accountable for violating labor rights under the Bangladesh Labor Act and investigating allegations of such violations. It also recommended amending the Bangladesh Labor Act in consultation with the International Labor Organization to align with international labor standards.
Proposed amendments include granting labor unions access to the official count of workers when attempting to form a union and allowing legal action against employees who fail to maintain such records. Additionally, there is a call to reduce excessive restrictions on the right to strike and mitigate severe penalties for illegal strikes.
The US also urged the government to ensure that workers in export processing zones (EPZs) can fully exercise their freedom of association and collective bargaining rights by bringing EPZs under the Bangladesh Labor Act. The Ministry of Commerce has committed to implementing labor laws in EPZs by June 2025.
The 11-point Bangladesh Labor Action Plan
- Prevention and Prosecution of Violence and Harassment
- Accountability of Factory Owners and Management
- Amendments to the Bangladesh Labor Act
- Reduction of Restrictions on the Right to Strike
- Empowerment of Workers in Export Processing Zones (EPZs)
- Commitment to Implementing Labor Laws in EPZs
- Promotion of a Safe and Fair Working Environment
- International Collaboration with the ILO
- Protection of Labor Activists
- Transparency and Accountability
- Long-Term Sustainability and GrowthTop of Form
US Considers Bangladesh’s Plea to Cut Exorbitant Pharma Fees
A representative from the commerce ministry informed that a pharmaceutical company in Bangladesh has suggested reducing the registration costs for pharmaceutical products, citing the significant expense of registering 5 products with the US Food and Drug Administration (FDA), which exceeds $6 million.
The official stated that the United States Trade Representative (USTR) has assured consideration of this proposal. During the meeting briefing, the commerce secretary highlighted Bangladesh’s proposal to facilitate technology transfer for agricultural sector development as a least developed country, which was positively received. The USTR acknowledged Bangladesh’s Intellectual Property Acts but stressed the importance of enhanced implementation.
Registration Costs for Pharmaceutical Products
- FDA Drug Establishment Registration Fee (2024): $5951
- FDA Drug Listing Fee (Up to 4 package sizes): $4951
- Certificate of Drug Listing (NDC): $195
From Bangladesh’s plea for duty-free access to US cotton garments to the BGMEA’s push for GSP revival and garment inclusion, the talks underscored the nation’s ambitions for enhanced market access. Amidst calls for robust labor reforms, reduced pharma registration fees, and technology transfer, both nations demonstrated their commitment to fostering a conducive environment for mutual growth and prosperity. As the curtains closed on this high-stakes dialogue, the stage is set for a new era of bilateral trade collaboration, where shared goals and pragmatic solutions pave the way for a future brimming with economic opportunities.
