It’s time to diversify exports to the United States
During a recent tour of Las Vegas, Minister of Commerce Tipu Munshi expressed the willingness of the government of Bangladesh to intensify trade with the United States. He was speaking to attendees at the Men’s Apparel Guild In California (MAGIC), the largest fashion market in the United States, showcasing clothing, footwear and accessories and sourcing resources from around the world.
Bangladesh’s Export Promotion Bureau (EPB) has long encouraged local mid-size clothing manufacturers to participate in this fair. This is a laudable but modest step in the development of trade between the two countries.
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What important steps have we taken to further promote the $ 9 billion trade? How did Vietnam, with zero exports to the United States in 1993, have export earnings of nearly eighty billion dollars? Have we competed intelligently, used our resources wisely, but fell behind or did we influence, win and give up? Could things be done differently?
A TALE OF TWO NATIONS
In the early 90s, Vietnam had nothing to sell! Instead, he bought from the United States. It took the country until 1994 to send the first shipment, when we were sitting on $ 1 billion in exports and $ 1.3 billion in total trade that year. Twenty-six years later, Vietnam has grown 11 times greater than ours in total trade and 13 times in export alone.
Braving the pandemic, Vietnam increased its trade with the United States to $ 89.63 billion in 2020, covering 2.38% of the total trade volume of $ 3.76 trillion. With China and Mexico retaining the top two positions, Vietnam climbed into the top 10. We were 46th with $ 7.92 billion, enjoying a market share of 0.21%, which is not that important.
The US Census Bureau has released data through the end of June, and it is evident that total trade will exceed the $ 4 trillion mark. Among the 10 best players, China loses two places and Vietnam goes up two notches!
Bangladesh continues to occupy the 46th position with a trade of 4.78 billion dollars.
That we need to diversify our basket of exports is fashionable by all circles: government, business and academia. This is perhaps one of the few areas where we have a national consensus!
Indeed, we have diversified. EPB statistics showed that in fiscal year 2020-2021, our exports to the United States amounted to $ 6.97 billion, consisting of 68 types of products. Only two items – knits and woven garments – captured 85.26 percent of the cake. If we add other textile products to that, it will be over 90%.
In contrast, Vietnam is the spearhead of equipment related to mobile phones, pieces of furniture, seats (excluding hairdressers and dental) and Portland, aluminous cement and slag. These were higher than its clothing exports by $ 12.57 billion.
Vietnam has carefully designed its exportable for the United States. We have probably developed such a market study neither at the public level nor at the private level. For many years, the top five US imports have been petroleum, passenger vehicles, computers, cell phones, and single dose drugs. Vietnam has hit two very well.
Back home, the recent emphasis on leather and non-leather footwear by producers and regulators can be seen. Our mainstream media insisted that the footwear exports to the United States from Bangladesh grew 73.13% in fiscal year 2020-2021 to reach $ 230.2 million, compared to $ 132.96 million in FY20.
At the same time, we can also muster all of our power behind furniture, insulated wires, toys, children’s bikes, refrigerators, freezers and air conditioning machines – all on the list of growing demand in the United States.
BANGLADESH AMERICAN TRADE COUNCIL
After a series of talks between the Prime Minister’s Office, the Department of Commerce, the United States Trade Representative and the United States Chamber of Commerce, a Bangladesh American Business Council was launched in Washington on April 6, 2021. At the launch, it was said that the council would serve as a platform for US businesses to engage the two governments in promoting opportunities for businesses to spur mutually beneficial economic growth.
We would like to see this as a big step forward. Heavyweights like Chevron, GE, Visa, MetLife or Facebook sit on the USBBC board.
One can also see very closely the developments from May to July. Google, Amazon, Facebook and Microsoft, the four US tech giants, obtained the Business Identification Number (BIN) as non-residents and began submitting VAT returns.
With $ 754 million in trade in June, Bangladesh ranked among the top five fastest growing U.S. trading partners. It could be argued that these rankings vary considerably from month to month. But registering a place in the top five out of 212 countries and territories with an astonishing 82.43% increase is worth cherishing.
This suggests that total trade will reach $ 10 billion this year. But, it is an altitude that we are climbing after 50 years of independence with more than 100 million workers.
It is time for us to change our habits a bit! Let’s not just focus on the RMG Cash Cow rather than other products that the United States has a lasting need for. This will require political and monetary support and adjustments in physical and financial infrastructure. Let’s do it!
We may have lost the battle, but we can still win the war!
The author is a member of the Pacific Council on International Policy and a former business advisor at the Los Angeles Consulate.