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Value Addition Rate in EU GSP

Govt, exporters sit today to work out Dhaka's stance

BDNEWS, Dhaka
Commerce ministry officials and business leaders will meet today to work out Bangladesh's strategy on the rate of value addition to get Generalised System of Preference (GSP) facility to export garment products to European Union.
Recommendations of the meeting will be placed at European Commission (EC) before the commission sits in Brussels on March 24 to finalise the structure of GSP facility for the least developed countries (LDCs), ministry sources said.
This will be the first meeting after the EC issued a guideline recently that said the basic origin rules in the relevant preferential arrangements should reflect both the production capacity of countries and processing operation with a real added-
value.
Under the new rule, garment exporters from the LDCs will get the GSP facility only on the value addition, although EU is yet to declare the final structure of GSP, which will remain valid from January 1.2006 to 2015.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Annisul Huq, Bangladesh Textile Mills Association (BTMA) President MA Awal, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Fazlul Hoque, Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Abdul Awal Mintoo and Metropolitan Chamber of Commerce and Industry (MCCI) President Kutubuddin Ahmed are likely to be present in the meeting.
BTMA and BKMEA sources said they will stick to the present 51 percent value addition whereas a top leader of BGMEA told the news agency that they will press for reducing the value addition below 40 percent.
According to the EC, they are forming a new method that favours using a method of evaluation of sufficient processing based on a " value added test" as the starting point.
Under this method, a product resulting from the working or processing of imported non-originating materials will be considered originating if the value added in the country or in a region in the event of cumulation amounts at least to a certain threshold (a minimum local or regional value content), expressed as a percentage of the net production cost of the final
product.
"It is very much important to work out the percentage value addition as BGMEA always wanted low value addition to export garment products whereas BTMAand BKMEA want to stick to present 51 percent value addition," said a highly placed source in the commerce ministry.
“It is the time for solidarity not for fighting," he added.
On 7 July 2004, the EC set out principles that will guide the new GSP scheme for the next ten years, as the current cycle ends on 31 December 2005.
Bangladesh accounts for only 3.6 percent of the total volume of EU GSPimportsand ranks eight among the GSP beneficiaries after China (33.1 percent), India (11.5 percent) and Indonesia (4.8 percent). In 2002, EU imports under GSP amounted to 53.2 billion euro.