US investors urged to set up Covid-19 vaccine plants in Bangladesh
Bangladesh has urged US investors to set up Covid-19 vaccine manufacturing plants in Bangladesh to ensure its availability at lower cost for people of the country.
An inter-session meeting of Bangladesh and USA in the Trade and Investment Cooperation Forum Agreement (TICFA) was held today where this demand was made. This is an inter-session meeting between the fifth and sixth rounds of TICFA meeting.
The fifth round was held in Dhaka in March this year.
"We need a lot of Foreign Direct Investment (FDI) for our country's development. US companies are the largest investors in Bangladesh mainly in power and energy sectors. We sought US investment in the pharmaceutical sector as this industry has been thriving in the country rapidly," said Commerce Secretary Md Jafar Uddin who led the Bangladesh side in the virtual meeting.
Christopher Wilson, assistant US Trade Representative (USTR) for South and Central Asia, led the US side in the meeting.
"Setting up vaccine manufacturing plants in Bangladesh by US investors might be a timely decision because the demand for vaccine is very high now," Jafar Uddin said after the meeting.
"We have also urged for US investment in non-covid pharmaceuticals industries," he said.
"We told the US to invest in contract manufacturing of medicine so that they can produce here and export from this country," the commerce secretary also said.
Investment in pharmaceuticals sector in Bangladesh could be lucrative to foreign investors as the country is eligible for manufacturing patent drugs cheaply until January 1, 2033 as per the decision of the World Trade Organisation (WTO) under the Trade – Related Intellectual Property Rights (TRIPS) agreement.
Riding on the waiver of the compliance of the TRIPS agreement of WTO, the local pharmaceuticals industries thrived a lot and have been meeting 98 percent domestic demand. Many local pharmaceuticals industries have been exporting medicine to nearly 150 countries including USA, Canada, UK and the EU countries after meeting the local demand.
In the fiscal 2019-20, Bangladesh exported pharmaceuticals products worth $136 million, registering 4.49 percent year-on-year growth, according to data from Export Promotion Bureau (EPB).
Bangladesh also demanded relocation of US companies currently running in other countries, citing preferential trade privilege and competitive production costs in Bangladesh compared to other countries.
Bangladesh Investment Development Authority (BIDA) in a virtual presentation also showed the country's strive in launching One Stop Service (OSS) centre to facilitate both local and international businesses.
The commerce secretary also said he raised the issue of reinstatement of the Generalised System of Preferences (GSP) for Bangladesh to the US market to enjoy zero-duty benefit on export of some locally produced goods like dry fish, tobacco and ceramics.
Before suspension of the GSP status, Bangladesh used to export products worth $24 million under the GSP facility.
The US government suspended GSP for Bangladesh in June 2013, citing poor labour rights and working conditions, after the nation's deadliest industrial accident -- Rana Plaza collapse -- in April 2013 that left some 1,138 workers dead and 2,500 workers severely injured.
After the suspension of the GSP, the then US government also gave 16 conditions to be fulfilled by the government and private sector of Bangladesh for the reinstatement of GSP status to the US markets.
Bangladesh has fulfilled the 16 conditions mainly relating to improving labour rights, workplace safety, inspection and remediation of the garment factory buildings by Accord and Alliance.
After fulfillment of the conditions, Bangladesh applied twice to the United States Trade Representative (USTR), America's principal trade negotiation body, for reviewing and reinstatement of the GSP status for Bangladesh.
However, the USTR is yet to reinstate Bangladesh's GSP status saying that a lot needs to be improved in the areas of labour rights.
"We are hopeful that the US will consider reinstatement of the GSP status to Bangladesh as we have already fulfilled US' conditions," said Jafar Uddin.
The commerce secretary further said Bangladesh also suggested duty-free export of locally made garment items, although US never gives zero duty benefit to any country for garment items, except some African countries under the African Growth and Opportunity Act on garment import.
Jafar Uddin asked the US delegation to allow zero duty benefit to Bangladesh if the apparels are made from the cotton imported from US. "We can demand for duty-free facility on garment made from US cotton as we import a lot of American cotton in Bangladesh," he said.
The US delegation in the meeting demanded withdrawal of fumigation on import of US cotton as the import of, especially, the upland cotton has been increasing in Bangladesh recently.
The US cotton faces double fumigation in Bangladesh mainly to prevent the attack of bollworm in the cotton. The double fumigation on US cotton in the ports was introduced by the then Ayub Khan-led government of East Pakistan, now Bangladesh, on a complaint of attack by the insects and in an excuse of higher production of cotton.
TICFA was signed in November 2013 to create a platform for negotiating trade and investment between the two countries.
The US is Bangladesh's single largest export destination. As a least developed country, 97 percent of the goods originating from Bangladesh had enjoyed duty-free benefits in the US markets as per a decision taken during the Hong Kong Ministerial Meeting of the World Trade Organization in 2005.
However, the country's main export item, garments, was not included in the 97 percent package. Garment exports account for 95 percent of Bangladesh's exports to the US.
As a result, Bangladeshi exporters face 15.62 percent duty on the export of apparel items to the US markets.
In the fiscal 2019-20, Bangladesh exported goods worth $6.04 billion to the US market and imported goods worth $2.58 billion from US.