Exporters bracing for fallout
Exporters of ceramic wares, tobacco and plastic goods said they will lose competitiveness in the US market due to the suspension of trade privileges by the world's largest economy.
"We are fully compliant. But we are going to pay the price for the faults of others," said Rizvi Ul Kabir, secretary general of Bangladesh Ceramic Wares Manufacturers Association.
Ceramic items accounted for around one-fifth of the total export earnings of $34.66 million that local industries logged under the GSP (Generalised System of Preferences) last year.
In 2012, export earnings from ceramics, mainly table wares, stood at $5.72 million, down from $6.17 million the previous year, according to US International Trade Commission data.
Kabir said ceramic products would face duty to enter the US markets and it would affect competitiveness.
"We have already started to feel the pinch. A US brand, Libbey, told us yesterday (on Friday) that we will have to cut prices by 20-25 percent unless the US withdraws the suspension. They want us to cut prices because our products will be subject to duty," he said.
"But we cannot reduce prices overnight as our production costs have increased," said Kabir, also chief executive officer of Shinepukur Ceramics Ltd.
Shinepukur is one of the 10 firms that export ceramics and earn more than $30 million a year.
On Thursday, the US administration suspended the GSP facility for Bangladesh, one of the 127 countries that get duty-free access to the US for their 5,000 products. The benefit provides less than 1 percent of Bangladesh's $24 billion export earnings as garments are excluded from the scheme.
Tobacco exports are also going to suffer. Last year, tobacco industry was the largest beneficiary of the GSP and earned more than $11 million in exports.
Sk Bashir Uddin, managing director of Dhaka Tobacco Industries, said 10 percent export duty on tobacco has affected exports in recent years.
"GSP suspension will be a fresh blow to our industry and our farmers. Tobacco exports helped ease Monga (seasonal hunger) in the Rangpur and Lalmonirhat region," he said, adding that tobacco is a cash crop in the north. Tobacco exports under the GSP more than doubled over the past two years due to rapid expansion of the sector.
From 2006 to 2010, tobacco acreage in Bangladesh rose by 141 percent, according to International Labour Rights Forum. Bashir said Bangladesh exports nearly 1,000 tonnes of tobacco to the US now. "The US companies buy from us due to our competitive price and duty benefit under the GSP facility."
After the GSP suspension, tobacco exporters are likely to face duty at 37 cents a kilogram. "Under such a high duty, tobacco exports will suffer badly," Bashir said.
He, however, said tobacco exporters might sustain their competitive edges if the government withdraws the 10 percent export duty.
Shahedul Islam Helal, a former president of Bangladesh Plastic Goods Manufacturers & Exporters Association, said exports of plastic film bags such as shopping bags, food containers and woven sacks were enjoying the GSP privileges.
"We are going to lose the opportunity to boost exports," he said, "The market was picking up. It will face a setback now."