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Indonesia slaps safeguard duty on RMG products

Jasim Uddin | Published: 21:52, Feb 25,2021 | Updated: 20:14, Mar 04,2021

 
 

Indonesia has imposed safeguard duty equivalent to a maximum of Tk 956 per piece on import of 134 types of apparel products for three years.

The Indonesian Committee on Safeguards of the trade ministry on February 23 issued a notification of the proposal of the safeguard measures in the form of specific duty on the products irrespective of exporting countries.

The safeguard measures will come into force after publication of the decree of the country’s finance ministry, it said in the notice published on the web site of the World Trade Organisation.

Although the duty is imposed unilaterally, Bangladesh’s export will be hit the hardest as the country already faces up to 25 per cent duty on export of readymade garment products to Indonesia, exporters and trade officials said.

Bangladesh in the last fiscal year 2019-2020 exported readymade garment products worth $27.91 million to Indonesia, which is more than 54 per cent of the country’s total export worth $51.42 million to Indonesia.

In FY2019, Bangladesh exported apparel products worth $30 million against import of textile articles worth $187 million, including $133 million of fibres, from the country.

Imposition of the safeguard duty on top of that will worsen Bangladesh’s export competitiveness in the country, they said.

The government should utilise the scope for consultation and bilateral trade relations to mitigate the impact of the safeguard measures, they said.

According to the notice, the safeguard duty has been imposed on top garments (casual), top garments (formal), bottom garments, suits, ensembles and dresses, outwear, babies’ garments and clothing accessories, headwear and neckwear.

The rate of specific duty is Rp 6,231 per piece of headwear and neckwear, Rp 45,499 for top garments (casual), Rp 1,56,979 for top garments (formal), Rp 90,346 for bottom garments, Rp 1,59,143 for suits, ensembles and dresses, Rp 1,38,930 for outwear, Rp 32,034 for babies’ garments and clothing accessories for the first year.

The duty rate is slightly lower for the second and third years.

The amount of duty ranges from Tk 37 to Tk 956 per piece of clothing item which come under the purview of the duty.

The notice said that WTO members who have substantial interests in the goods would have to request for consultation within seven days from the date of circulation of the notice.

The consultation is scheduled to be held no later than March 19, 2021, it said.

According to the WTO, a safeguard investigation seeks to determine whether increased imports of a product are causing, or threatening to cause, serious injury to a domestic industry.

A WTO member may take a safeguard action such as the restricting of imports of a product temporarily only if increased imports of the product are found to be causing, or threatening to  cause, serious injury to the local producers, according to the WTO.

Bangladesh Trade and Tariff Commission member Mostafa Abid Khan told New Age that the Indonesian authorities had not considered any of Bangladesh’s arguments in imposing the duty.

In most cases, the rate of duty is equivalent to the price of the product, he said.

‘We have the options of participating in consultations and seeking a remedy at the WTO,’ he said, adding that participating in the consultation is a better option.

Although the safeguard is imposed unilaterally, Indonesia’s decision goes mostly against four countries — China, Vietnam, Singapore and Bangladesh.

The trade officials also said that Bangladesh had argued during the hearing that the growth of Bangladesh’s export to the country was a normal trend achieved over the years.

Bangladesh Garment Manufacturers and Exporters Association president Rubana Huq said that the country had until February 28 to appeal against the decision.

Earlier, the BGMEA prepared a statement for the hearing on safeguard investigation held in November 2020 where the trade body argued that there were discrepancies in the figures considered in the petition.

It also argued that the safeguard petition should not be applicable to Bangladesh considering the existing duty on its export to Indonesia and the balance of trade favourable to Indonesia.

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