The United States International Trade Commission (USITC) is set to investigate whether the recent surge in prices of garment items sourced from Bangladesh indicates unfair competition.
This move comes after the USITC observed that the prices paid by the US for Bangladeshi garments per unit have surpassed the average prices paid for garments sourced from various countries. Prompted by this discrepancy, the agency has initiated an inquiry to ascertain if any anti-competitive practices are at play.
An independent and nonpartisan federal agency with quasi-judicial functions, USITC is tasked with fulfilling various trade-related mandates, as outlined on its website. Faruque Hassan, President, Bangladesh Garment Manufacturers and Exporters Association (BGMEA), is slated to participate virtually in the hearing scheduled for March 11.
According to Hassan, the rise in prices is primarily attributed to adjustments made by American clothing retailers and brands to offset increased raw material and shipping costs incurred during and after the pandemic. He noted that the unit price for Bangladeshi garments has been gradually increasing since 2017, while China's prices have declined. Presently, Bangladesh offers garments at $3.23 per unit, compared to $1.86 for China and $2.95 for Pakistan.
Hassan highlighted that Bangladesh's garment industry primarily focuses on manufacturing basic items, resulting in an average price level that exceeds the global average import price per unit paid by the US. He also pointed out that recent geopolitical tensions and fluctuations in diesel prices have further strained global supplies and demand dynamics.
Hassan emphasised, the cost of production has surged significantly in recent years due to rise in electricity costs by 25 per cent, gas by 286.5 per cent, and diesel by 68 per cent. Inflation has further elevated the cost of finance, contributing to increased production and goods costs. Additionally, bank charges, municipality fees, and certification fees have risen considerably.
Over the past decade, the garment industry has invested millions of dollars in factory remediation and green manufacturing initiatives to meet evolving due diligence requirements. Hassan hoped that the USITC would consider the broader context rather than solely focusing on cost and efficiency-based competitiveness. He also underscored the challenges stemming from the lack of local raw materials and foreign direct investment in the industry.
Further, Hassan urged for a comprehensive assessment of the multifaceted factors impacting Bangladesh's garment sector.
