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Tuesday, May 28, 2024

US apparel and textile importers oppose tariff hike on garments from Bangladesh and others

Four major American trade bodies have strongly opposed the suggestion aimed at imposing higher tariffs on apparel items imported from Bangladesh and four other countries since it is the end-consumers who bear the additional prices ultimately.

The American Apparel and Footwear Association (AAFA), the National Retail Federation (NRF), the Retail Industry Leaders Association (RILA), and the United States Fashion Industry Association (USFIA), collectively opposed higher tariffs on apparel imports from Bangladesh, Pakistan and India.

They expressed their opposition in this regard in a letter to David Johanson, chair of the US International Trade Commission (USITC), on March 25. The AAFA is the national trade association representing apparel, footwear and other sewn products companies and their suppliers and the NRF advocates for the people, brands, policies and ideas in the retail industry.

The RILA is the trade association for leading retailers while the USFIA represents textile and apparel brands, retailers, importers and wholesalers based in the US and doing business globally. The four associations comprise hundreds of members, recording sales amounting to several trillion dollars annually.

The USITC is conducting an investigation — under the name of Apparel: Export Competitiveness of Certain Foreign Suppliers to the United States — into the sudden price hike and the supply glut of garment items to the US markets from five countries: Bangladesh, India, Indonesia, Cambodia, and Pakistan.

In the letter, the associations strongly disagreed with the move to raise the tariff rates on the imports of apparel items. During the commission’s hearing attended by the leaders of the trade bodies, it was said that the US imposes higher most-favoured-nation duty rates on apparel products than nearly any other sector and factor into the cost competitiveness of source countries.

Bangladeshi apparel exporters are facing one of the highest tariffs at 15.62 percent in the US, which imported more than $116 billion worth of garment items last year. Bangladesh’s share stands at 9.3 percent. Bangladesh, India, Indonesia, Cambodia, and Pakistan are, respectively, the third, fourth, fifth, sixth and the eighth largest apparel supplier to the US.

Bangladesh exports products such as denim, woven shirts, woven pants, t-shirts, active fleeces, and basic sweaters to the US. Despite ineligibility for duty-free treatment under the generalised system of preferences (GSP), which excludes apparel products, the five countries remain competitive.

“In part, this reflects the important role these countries play for apparel brands and retailers’ broader supply chain diversification efforts,” the letter said. “While some have suggested that the US should impose higher tariffs on apparel products from these and other countries, we strongly disagree.” The leaders also said they experienced through the imposition of tariffs on products from China, tariffs increase costs for US businesses and American consumers, not for foreign exporters.

If the administration is serious about its desire for US companies to reduce dependencies on any single country, imposing tariffs on other source countries would be counterproductive, they said. “Instead, we encourage the US government to take additional steps to help further accelerate the ongoing supply chain diversification efforts. This includes immediate retroactive renewal of the GSP programme, as well as expanding GSP to include certain apparel products.”

Currently, the US does not provide the GSP to any country. The tenure of the latest GSP programme came to an end in 2020 and the US Congress has not revived it since. The US suspended the GSP facility for Bangladesh in 2013, citing poor labour rights and poor workplace safety following the Tazreen Fashions fire and the Rana Plaza building collapse.

In the case of Bangladesh, India, Indonesia, Cambodia, and Pakistan, the members report that these countries have well-established textile industries, characterised by highly skilled labour forces and advanced sewing capabilities, the letter said.

“India and Pakistan are also vertically integrated. And increasingly, members report that apparel products sourced from Bangladesh, Cambodia, India, Indonesia, and Pakistan contain inputs also sourced from within these countries.”

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