When it comes to exporting garments to the US, Africa has a distinct advantage against Bangladesh. It’s because of discriminatory duty benefits. Garment exports from Africa to the US, attracts zero-duty.
Garment exports to the US from nine leading African countries increased 9.66 per cent year-on-year in 2013. However, apparel exports to the US from Bangladesh fell 1.12 per cent in the first five months of 2014 from the same period a year ago. African countries have the cotton benefit, which Bangladesh does not have. Bangladesh now fears losing its competitive edge due to a discriminatory duty structure and a higher cost of production.
The African Growth and Opportunity Act (AGOA) gives duty-free and quota-free status to apparel items made in more than 45 countries in sub-Saharan Africa. While Bangladeshi garment exporters paid $828 million in duties to US customs last year and $3.41 billion in the last five years.
A distinct advantage in the African trade preference is that the fabric can come from any country, including places such as China and South Korea, for apparel manufacturing and still receive duty-free status. That gives Africa an advantage compared to major apparel producing countries such as China and Vietnam, whose garments are subject to tariffs.