Fear and panic of sanctions

Mahfuz Emran: Exporters are expressing concern about possible trade restrictions on Bangladesh, the main buyer of the garment sector in the United States and Europe. Faruq Hasan, president of garment manufacturers’ organization BGMEA, said in an exchange meeting with stockholders, there are various pressures coming from the market. “There is an issue from the US. You have seen that President Biden has signed the memorandum. On the other hand, the European Union has also visited Bangladesh, which is also under pressure. The buyers have already put a clause that they will not accept goods, they will not pay on goods, as far as sanctions are concerned. This clause will not open our bank account.” BGMEA President has sought the cooperation of all stakeholders in the transition.
According to the relevant sources, in the conditions they said, they will not take responsibility for the goods or payment if any such restrictions are implemented. This condition is a negative push for the garment industry of Bangladesh; this has pushed local exporters to uncertainty and potential financial loss.
Acknowledging the matter, BGMEA leader said, a buyer (buyer) has already added a clause in their new LC (Letter of Credit) that if Bangladesh faces any sanctions, then it will not take the product; or if the restriction is enforced after shipment, they will also not be able to pay for the product.
Recently, a buyer has placed a condition on a garment factory in the country. BGMEA President clarified on Wednesday. He said, the global trade scenario is changing rapidly; Human rights and environmental issues are gaining increasing priority, while geopolitical issues are also influencing trade.
Therefore, I feel the urge to make this statement to clarify some confusing issues. He said, a copy of the KLC from a foreign buyer to a member of BGMEA has come to our attention. We will not be involved in the transaction process. In this case, we will not be responsible for any delay or cancellation of the transaction due to the ban.
Farooq Hassan said, “This statement has created concern and confusion that an embargo may be imposed against Bangladesh, which is not correct. Note that the LC comes from a specific buyer and is notified by a statutory mandate by a country. Therefore, it cannot be applied to Bangladesh.” BGMEA points out in their explanation that there is a misinterpretation of the ethical restrictions.
In an exchange meeting with stakeholders, he said, garment entrepreneurs are already facing some challenges ahead of the elections and the latest emanating from buyers has made these conditions even more alarming.
This is a matter of concern for garment exporters, said the BGMEA president, noting that the global apparel business is waiting to turn around. Banks may not be willing to open back-to-back LCs against export orders of such master LCs.
Farooq Hassan said, last Black Friday, Thanksgiving and Cyber Monday showed a big jump in the sale of clothing products in the United States. If the clothing manufacturers can survive the next six months, then they will be able to stand with more energy in the days ahead.
BGMEA held a meeting with the stakeholders of Bangladesh C&F Association, Bangladesh Freight Forwarders Association, Bangladesh Shiphandling and Berth Operators Association, Bangladesh Shipping Agents Association, Bangladesh Container Shipping Association and Bangladesh Inland Container Depot Association. BGMEA president asked for the cooperation of all stakeholders in dealing with global challenges at this time of market recovery. BGMEA senior vice-president first vice-president Syedanzrul Islam also spoke in the meeting.
In a recent event, expressing concern about possible US sanctions in Europe, BGMEA president said, such measures can also have a negative impact on business; As a result, goods can be sold in stores. Most of the countries in Europe, including China and Russia, can follow suit. But those who have better purchasing power will look for alternatives in other countries. If a buyer finds alternatives elsewhere, it may take three to five years for him to return to the previous country.
Bangladesh has also been under pressure from global rights groups, institutions and governments. In the country, those who threaten, fear; The US administration has announced sanctions against those who attack union leaders, labor rights defenders and labor organizations. This warning message from the United States is worrisome.
US Secretary of State Anthony Blinken mentioned the name of Bangladesh garment worker Kalpana Aktar in a statement and called to ensure the protection of labor rights defenders in Bangladesh. In the fiscal year 2022-23, one-fifth of Bangladesh’s apparel products were exported to the United States, with a financial value of $47 billion. As a result, Bangladesh’s export income has a large impact on the United States. Recently, the European Union (EU) and the United States have expressed similar concerns about labor and human rights in Bangladesh.
In the first 9 months of this year (January-September), the import of clothing from the United States has decreased. According to EPB data, Bangladesh’s clothing export to the United States has decreased by 8.39 percent during January-October 2023.