Vol. 12, No. 3,009 - The American Reporter - October 19, 2006

by Syful Islam
American Reporter Correspondent
Dhaka, Bangladesh

Printable version of this story

DHAKA, Bangladesh -- A number of Bangladeshi exporters are allegedly involved in misuse of Generalized System of Preferences (GSP) facilities which grants duty-free export to some developed countries including the U.S. and the European Union, official sources said.

The South Asian nation's Ministry of Commerce in an investigation earlier this year said that a Bangladeshi footwear company named "Lalmai Footwear" was involved in exporting the products of some "third countries" to the European Union countries using GSP facilities. Such third countries, including some developing countries from Asia, are not allowed to enjoy GSP facilities.

The company strongly denied its involvement in the GSP irregularities. The Ministry also identified a number of Export Promotion Bureau (EPB) officials who were allegedly involved in the GSP irregularities. The officials were said to have issued GSP certificates in favor of the company without undertaking the necessary investigations.

The inquiry became necessary after the European Union complained that some third country goods were exported to European states through Bangladesh by misuse of GSP facilities. They claimed that five consignments of goods of some third countries were exported by the company to EU countries.

When a committee headed by Nasir Hussein, Director General of World Trade Organisation (WTO), was formed, its investigators learned of the alleged involvement of Lalmai Footwear and some EPB officials. In a report on the inquiry, the committee recommended that the Ministry of Commerce closely monitor the activities of the footwear company, the sources said.

During the inquiry, the committee also noticed that the Lalmai Footwear may have exported more consignments than first thought to EU countries. This prompted the committee also to investigate the consignments, which were exported by the company from January 2003 to February 2004.

The committee said it learned that the company exported 304 consignments to EU countries during the period ending February 2004. Out of 304 consignments, 275 were legitimately exported as its own merchandise but 29 other consignments contained goods of other Asia countries without GSP facilities.

The committee submitted the inquiry report on June 29, recommending immediate action against the footwear company and the involved EPB and Bank officials.

When contacted, the managing director of Lalmai Footwear, Aminur Rashid, told The American Reporter that the compamny was not involved in illegal trading. He said that a "vested quarter," or intermediary, forged the signature and letterhead of his company to get GSP certificates in favor of the exporters.

He also said that he had informed the EU of the forgery and urged the European community to take action against the importer countries.

After the end of the quota system in 2005, Bangladesh and other least-developed countries (LDCs) had to depend on GSP facilities to survive. Currently, Bangladesh is exporting a large quantity of goods to the United States, the EU and other developed countries without export duties under the tersm of the GSP facilities.

Experts said if Bangladesh loses the GSP facilities due to their misuse, it would have face a difficult situation. Export volume would fall and many industries might face closure, they said. To prevent illegal trading, the government would have to overhaul the whole system, they said.

To closely monitor the procedure of issuing GSP certificate, a high-level committee should be formed to enquire such types of misuse of GSP facilities in other products, the experts added.

Copyright 2006 Joe Shea The American Reporter. All Rights Reserved.

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