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Dhaka agrees to EC's new GSP rule

Allowing raw materials from SAARC states worries local manufacturers

By Rafiq Hasan
Bangladesh has reportedly agreed to a European Commission (EC) provision that provides for entitlement of goods made with raw materials from any SAARC country to the Generalised System of Preference (GSP) facilities.
But the reported decision has drawn flak from local fabric and garment accessories producers who say it would seriously affect the textile industries
A Commerce Ministry official wrote a letter to the SAARC Secretariat giving Bangladesh's consent to the provision. The SAARC Secretariat communicated it to the EC headquarters, diplomatic sources said.
The EC’s Dhaka office also continued Bangladesh's acceptance to the provision But a high Commerce Ministry official denied that Dhaka has agreed to the new GSP provision.
"I don't know of any such letter being sent to the EC." said Fazhil Hauqe, Additional Sec-
retary at the Commerce Ministry.
Meanwhile, sources at the EC's Dhaka office said the provision to allow GSP for goods manufactured with raw materials of regional origin is nothing new. This system Is also applicable for the ASEAN region
Bangladesh Textile Mills Association (BTMA) officials said the rule will affect the yarn and fabric producing mills in the country. The sale of those Items would shrink drastically and the market would be Hooded with Indian products, they said. The local fabric produces will be the worst affected.
He alleged that the government did not consult them before agreeing to the provision
A BGMEA official also said the government should have not accepted the regional accumulation without consulting the business community.
The rule for regional accumulation has been there for long and It would be applied for SAARC region as the countries
In the grouping agreed In this regard, said an EC official. The documents regarding the new rule would be made available here very soon, he said
According to the new rule the EC will provide GSP facilities to goods from SAARC countries if the products are manufactured with the raw materials originated In the SAARC region. Tne local value addition, however, would have to be more than that of the imported materials.
Earlier, the GSP facilities were provided only to those goods that were produced with tlie local raw materials
Sources In the business circle said Bangladesh had been turning down the idea of re-f'tonal accumulation for the ast 20 years considering the fact that it would adversely affect the local textile and accessories Industries,
The Commerce Ministry official sounded a bit confused about the issue. He said the matter Is very sensitive and the decision should come from the higher authorities.
He admitted that the business community leaders at a recent meeting raised the Issue and wanted to know the government position.
"I called a separate meeting with the business community to review the whole Issue. The government would do everything for the interest of the nation. ' he told the Dally Star.
As much as 45 per cent of total garment export irom Bangladesh goes to the EU countries And 90 per cent of those exports is possible thanks to the GSP facilities, said an official at the Export Promotion Bureau (EPB).
He said if the condition for country of origin is relaxed. India would benefit because the exporters would use Indian raw materials Instead of local ones. Many local textile Industries would close down because the Indian goods are of better quality and are supplied on tune, he added.