Garment makers in Bangladesh could still enjoy duty-free access to the US market, as the Trump administration included a clause to this end when imposing its 20 percent reciprocal tariff, effective from August 7.
Under the new rules, if 20 percent of the raw materials used in a product are sourced from the US, that product will qualify for duty-free entry into the Western market.
In response, local textile millers are aiming to double their cotton imports from the US within the next year, according to a press release from the Bangladesh Textile Mills Association (BTMA) on Wednesday.
The move to boost US cotton imports follows a series of meetings between a BTMA delegation and relevant US institutions to explore areas for increased cooperation.
US cotton imports account for only about $350 million annually, representing just 7 percent of Bangladesh’s overall cotton imports.
As such, the BTMA aims to more than triple this amount to help balance trade.
The BTMA noted that US cotton is relatively more expensive and called on the government to provide support to importers to offset the additional costs, making the increased imports financially viable.
In a recent interview, BTMA President Shawkat Aziz Russell said that US cotton currently accounts for about 8 percent of the country’s cotton imports.
But now, it is expected to rise to 20 percent within the next fiscal year.
Against this backdrop, he called for government policy support, including the establishment of a dedicated bonded warehouse to store US cotton and reduce the 90-day lead time for shipments from the US.
Additionally, he urged the government to lower the interest rate on loans from the Export Development Fund to 2 percent for US cotton imports.
Furthermore, he requested a cash incentive of 3–4 cents per pound and the waiver of the 1 percent advance income tax on export earnings of textile mills.
“The price of US cotton is higher than that from other countries, but its quality is also better. This means there is no adverse impact on export pricing,” Russell said.
US cotton costs 9–12 cents more per pound than Indian cotton, but its wastage is lower—just 5 percent to 10 percent compared to 15 percent for Indian cotton—making it more economical.