The Obama administration has cancelled the GSP facility on exports of sleeping bags from Bangladesh on complaints from US-

based Exxel Outdoors, a sleeping bag maker.

The US removed the sleeping bags from tariff reductions, known as the generalised system of preferences, onThursday. The issue of lifting the GSP facility from the Bangladeshi sleeping bags at first came to focus when Senator Jeff Sessions of Alabama lodged an objection in December 2010 demanding a ban on the duty-free import of sleeping bags.

Sessions argued that sleeping bags should be subject to tariff, like other textiles, because the item competes with American manufacturers.

But the Obama administration allowed the duty-free facility for sleeping bags from Bangladesh in the renewed GSP scheme on September 22. The trade programme allows about 4,800 products from 131 countries to be imported duty-free.

The local manufacturers and government officials think Bangladesh will lose a good chunk of business if the benefit does not continue.

Bangladesh will raise objection against the decision of the US government, as the country might lose its business for the cancellation of the facility, said Commerce Secretary Ghulam Hussain.

“We will assess the impact of the decision and will protest the decision through the embassy of the US in Dhaka as we have no lobbyist group,” Hussain said.

Shahnewaz Karim, manager (shipping) of Chittagong-based Northpole BD Ltd, said sleeping bag is an emerging product from Bangladesh.

Over the last four years five factories have been set up in Chittagiong Export Processing Zone and Karnaphuli Export Processing Zone as the demand for the item is increasing gradually among the international buyers.

Many workers will lose their jobs as the local manufacturers will have to compete with China, a strong player in the segment.

He said, over the years the manufacturers produced skilled manpower and developed technology and local fabrics for the rising sector.

“So, Bangladesh will lose a big chunk of business for the cancellation of the GSP facility on export of sleeping bags,” he said, adding his company exports sleeping bags worth $5 million a year.

Other competing countries will enter the US market, while Bangladesh will have to export the item to the US market at higher costs.

But, the hope is that Bangladesh does not export the item to the US only, it also exports to Canada and other cold countries in the western world.

Mashrul Anwar, commercial manager of Eusebio Exporting Bangladesh Ltd, said Bangladesh will be allowed the GSP facility on export of sleeping bags only if the makers can add 35 percent value during manufacturing.

But, 35 percent value addition is almost impossible in manufacturing sleeping bags as almost every raw material is imported, he said.

“We have to import the fabrics for making the item and in case of sleeping bags GSP facility will not be applicable if the bags are made of imported fabrics,” he said.

The US government agreed to grant a 97 percent duty-free facility to the least developed countries like Bangladesh at the Hong Kong ministerial meeting of the World Trade Organisation in 2005.

But major export items, such as garments, leather goods and footwear, were not included on the list.

In fiscal 2010-11, Bangladesh exported knitwear items worth $1.12 billion and woven garments worth $3.50 billion to the US, according to data from Export Promotion Bureau.

In 2010, Bangladesh paid $630 million in duty for exporting goods to the US, data showed. The US instituted the GSP in 1976 by the Trade Act of 1974. Congressional authorisation of the GSP programme expired in December 2010.

reefat@thedailystar.net