Bangladesh opposes Indonesia’s move to slap safeguard duty

26 Nov 2020 8:39 AM
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Bangladesh's features opposed Indonesia's proceed to impose good safeguard duty on apparel shipments to the country as such a good measure would be inconsistent with the provisions of global agreements on safeguards, tariffs, and trade.

The Bangladesh Trade and Tariff Commission (BTTC) and the Bangladesh Garment Producers & Exporters Association (BGMEA) shared their arguments and observations on the matter throughout a recent hearing conducted by the Indonesian Safeguards Committee (KPPI).

The hearing occurred on November 20, more than one-and-a-half a few months after the KPPI initiated a study into the viability of a safeguard duty carrying out a request from the Indonesia Textile Association against the import of apparel.

The function was organized to give apparel exporting nations the possibility to present their views on the proposed safeguard duty.

Bangladesh fetched about $30 million from apparel exports to Indonesia on fiscal 2018-19.

Hence, levying a safeguard duty would hurt the shipment of garments, which may be the country's key export item, based on the BTTC and BGMEA observations.

Practically 40 lakh workers, mainly women, have employment with the apparel sector.

In its submission with respect to the federal government, the BTTC cited the provisions in the overall Agreements on Tariffs and Trade (GATT) and the World Trade Organization (WTO) Agreement on Safeguard to make clear that imposing such precautionary measures does not fulfil the conditions set in the related treaties.

"Therefore, resorting to guard measures is unwarranted," said BTTC Member Mostafa Abid Khan.

The WTO agreements provide its members with the scope to take safeguard actions, such as temporarily restricting the imports of a product to protect a specific domestic industry from any potential threat, according to the WTO.

Such measures, which in broad conditions take the type of the suspension of concessions or obligations, can contain quantitative import restrictions or duty increases to higher than bound rates, said the organisation.

The Indonesian authority initiated a study into its apparel imports for the time between 2017 and 2019.

The BTTC said it made an attempt to determine whether apparels were exported to Indonesia in increased quantities, absolute or relative conditions to domestic production together with the trends in the rates and levels of increase in imports, through the period.

It then said the quantity of garments shipped dropped in 2019 compared to the previous time and that the downward tendency was going to continue this year.

So, the upward trend in the price and amount of the merchandise under investigation will not satisfy the conditions outlined in the WTO Agreements on the subject of Safeguard, the BTTC said.

The BTTC also said Indonesia cut its tariff rates consistent with free trade agreements with countries such as for example China. It said due to a 10 per cent decrease in tariff for China, imports from the united states would likely increase.

"This is really what happened," the BTTC added.

Consequently, the commission said, it might be deduced that an upsurge in the import of the merchandise displayed in the petition isn't due to any unforeseen production, a prime prerequisite of taking safeguard actions as per the global trade arrangement.

The BGMEA said the claim in the petition filed by the Indonesian Textiles Association, regarding the decline in production, didn't match info from the large and medium manufacturing industries or micro and small making industries that produced apparels for the same period.

Indices clearly show the production of micro, small, medium and large manufacturing industries maintained a positive growth between 2017 and 2019, in line with the BGMEA.

As the petition was lodged on the grounds of injury to the household industry, Indonesia's attire export has also been confronted with losing competitiveness, explained the BGMEA.

It cited falling exports of apparel and increasing manufacturers' prices, unit rates and the rising minimum amount wage in the southeast Asian country.

"Since all the data related to value and wages are suggesting that Indonesia's apparel market may be experiencing erosion in competitive benefit, the temporary safeguard measure is usually neither appropriate as per the agreement in safeguards, nor is it satisfactory to protect the neighborhood industry."

The trade body also cited the trade imbalance between Bangladesh and Indonesia, showing that it favours the latter.

Bangladesh brought over $1.94 billion worth of goods from the southeast Asian country and exported that of $57 million in the fiscal year of 2018-19.

Of the garment items, Dhaka imported $187 million well worth of textile articles and shipped $30 million worth of apparels.

"The import of textile by Bangladesh, which goes to the production of export-oriented garments, is permitted to enter duty-no cost here," said BGMEA President Rubana Huq.

In its submission, the BGMEA cited that Bangladesh's apparel items face duties as high as 25 % to enter Indonesian market segments while Chinese goods get duty benefits.

Indonesia's local industry might be facing the impression due to the zero-tariff access in favour of giants want China and Vietnam.

Accordingly, imposing additional duty would merely harm Bangladesh, said Huq.