Indonesia Slaps Safeguard Duties On Bangladeshi RMG Goods

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Indonesia has imposed safeguard duties ranging from US$ 1.33 to US$ 4.34 on imports of garments and accessories from all countries, including Bangladesh. The duties, which entered into force on 12 November, 2021, will continue for three years till November, 2024, a notification dated 17 November from the World Trade Organization (WTO), stated.

It says that the safeguard duties will apply to imports of garments and accessories, except eight items of headwear and neckwear. As per the regulation, the safeguard duties will range from Rp19,260 to Rp 63,000 per item for the first year and will decline gradually. China, Singapore and Vietnam currently enjoy duty-free access to Indonesia, whereas imported apparel from Bangladesh is already subject to duty of up to 25%.

Bangladesh bought over US$ 1.94 billion worth of goods from the Southeast Asian country and exported US$ 57 million worth of goods in the fiscal year 2018-19. Of the garment items, Bangladesh imported US$ 187 million worth of textile articles, including US$ 133 million of fibres and exported apparels worth US$ 30 million.

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Safeguard duties are state levies that can be imposed on imported goods in case of an absolute or relative surge in the import of goods detrimental to similar domestic products or which could cause heavy losses to the domestic industry. Bangladesh, however, is not worried about the duties.

“Indonesia is not a big market for us,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) co-president Shahidullah Azim said. “We export very little there. They are also our competitors in the export of readymade garments. As a result, their new tariffs will not have a significant impact on our exports.”

Bangladesh Knitwear Manufacturers and Exporters Association Executive President Mohammad Hatem echoed Shahidullah, saying that Indonesia is not a potential market for Bangladesh so the safeguard measures will not have any major effect on exports.

The introduction of the safeguard measures follows an investigation into Bangladesh’s apparel exports to Indonesia for the period 2017-2019 conducted by the Indonesian Safeguards Committee (KPPI). It recommended the imposition of the tariffs, arguing that Indonesia’s local industry was unable to compete with the imported goods.

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The Bangladesh Trade and Tariff Commission (BTTC) and the BGMEA shared their arguments and observations on the matter last year.

The World Federation of the Sporting Goods Industry (WFSGI), an organisation based in Switzerland, also said that Indonesia had violated WTO rules to impose the safeguard measures.

“Even though KPPI in its questionnaires requested interested parties to provide data for the periods January to June 2019 to June 2020, it then completely ignored the data and based its analysis on the period of 2017-2019,” the WFSGI said.

The findings, which were conveyed to the WTO last February and November, only cover the period 2017-2019 even though later data was available and specifically requested for, it added.

WTO cell Director General and Additional Secretary of the Ministry of Commerce Hafizur Rahman said that Indonesia claimed it had taken the initiative to slap the duties in compliance with WTO policies to protect the interests of the domestic industry.

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“There is an opportunity to file a case against Indonesia’s move with the WTO. However, since the amount of Bangladeshi exports to the country is not very high, it is less likely we would benefit by being the only ones to do so. Garment exports from China and Thailand are high in Indonesia. If these two countries sue, Bangladesh will consider becoming a party to it,” he added.

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