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The Financial Express

Cotton import from US: Revoking the provision of double fumigation

MS Siddiqui | Published: January 19, 2020 21:02:45 | Updated: January 29, 2020 20:50:56


Cotton sector leaders from the United States want Bangladesh to lift the old fumigation rules on the import of US cotton as the process imposes an additional cost burden on the importers and spinners and results in increased lead time. American Cotton Shippers Association (ACSA) president Raymond Faus recently urged Bangladesh to review the unfair restrictions.  	—Courtesy Fibre2Fashion News Desk - India via the Internet Cotton sector leaders from the United States want Bangladesh to lift the old fumigation rules on the import of US cotton as the process imposes an additional cost burden on the importers and spinners and results in increased lead time. American Cotton Shippers Association (ACSA) president Raymond Faus recently urged Bangladesh to review the unfair restrictions. —Courtesy Fibre2Fashion News Desk - India via the Internet

When Bangladesh is seeking duty-free access of exportables to the American market, the US authorities have complained about duplication of fumigation test of cotton imported by Bangladeshi traders that created certain barrier to exports. The United States is one of major sources of cotton imported by Bangladesh and the second largest market for Bangladesh readymade garment products. Bangladeshi cotton importers say the time-consuming process of testing cotton at the port of entry affects the country's business competitiveness.

Such fumigation test is required as per rules of the erstwhile Pakistan period that have been incorporated into recently framed rules of Bangladesh. Any cotton imported into Bangladesh must carry sanitary and phyto-sanitary (SPS) certificate from competent authorities of the exporting country, according to Plant Quarantine Rules, 2018. It further says, cotton imported from American region requires additional fumigation at port of entry after arrival.

Fumigation is a method of killing pests, termites or any other harmful living organisms to prevent transfer of exotic organisms. It is mostly done on completion of stuffing of cargo and closing the door of container. Pre-shipment fumigation is asked for in most of the cases wherein wood materials are used for packing export goods. Regulations of some countries insist on fumigation of cargo by the supplier and producing fumigation certificate along with other export documents.

For imports of cotton, fumigation means the process of eliminating specific cotton germ named "boll weevil" using chemicals. While Bangladesh applies the rules of fumigation of cotton at port of delivery for imports from the USA since the Pakistan days, cotton from other countries could be released from port fulfilling the requirements of certification procedures. Cotton imported from different countries is unloaded in Singapore or Colombo from mother vessels and re-loaded in the feeder vessels in both ports as no mother vessel could come into the Chittagong port. If American cotton is there in the consignments from other countries, the whole consignment needs to be fumigated.

India and Vietnam import most of their cotton from the United States. However, no such fumigation is required.

In 1966, the then Pakistan government had prepared the 'Destructive insects and plants' rules that asked for quarantine certificate from Quarantine Department before release of US-origin cotton. This measure was taken to protect cotton produced in West Pakistan from competing with the US cotton. Bangladesh has revised the law and enacted new Plant Quarantine Act in 2011 and framed Plant Quarantine Rules in 2018. However, the rules for the US-origin cotton remain unchanged.

As the test is carried out before delivery from the ship at Bangladesh port, cotton importers claimed that so far not a single case of insects arriving with imported US cotton was detected. A report of US Trade Representative (USTR) office observed that "U.S. cotton exporters and Bangladeshi cotton importers assert that this requirement is unnecessary because of mitigation measures taken prior to export to eliminate any presence of the pest in larval or adult form. These measures include ginning, cleaning, and bale compression. This fumigation is also unnecessary because the United States has eradicated boll weevil from all cotton-producing areas of the United States, with the exception of a small region in southern Texas". Therefore, the USTR considers fumigation at Chittagong port as a non-tariff barrier (NTB).

Technical experts from the US Department of Agriculture Animal and Plant Health Inspection Service (APHIS) accompanied by their Bangladeshi counterparts, reportedly visited the Chittagong port in September 2018 to inspect imported US cotton and demonstrated that there was no presence of boll weevil.

Also the Bangladesh Textile Mills Association (BTMA) says this is a duplication of test at Bangladesh port since the US cotton is fumigated before shipment and there is no report about rejection of the US cotton consignment till date.

This requirement, according to importers, adds 3-4 cents in cost per bale, and delays access to importers for a period of no less than five days. This process also hinders increased demand for US cotton.

The US is pursuing Bangladesh to withdraw this restriction. At the 4th council medium-term meeting (2019) of Bangladesh-US Trade and Investment Cooperation Forum Agreement (TICFA), the US side requested Bangladesh to withdraw this mandatory fumigation at Bangladeshi ports.

BTMA data show, Bangladesh in 2018 imported 8.2 million bales of cotton, of which some 37.06 per cent cotton was imported from Africa, 26.12 per cent from India, 11.35 per cent from the Commonwealth of Independent States (CIS) countries, 11.14 per cent from the US, 4.65 per cent from Australia, and the rest, 9.65 per cent, from other countries.

The US was conveyed that Bangladesh might accept a single fumigation check instead of current double check on import of cotton from the USA subject to application of micro-organism eradicated seal on its containerised shipments.

However, Bangladesh Tariff Commission (BTC), in a study, has recommended that the government should not stop applying fumigation rules at the port of entry while importing US cotton. "It is nearly impossible to withdraw this requirement if there is no declaration from the appropriate authority of the United States certifying that boll weevil has been eradicated from the territories of the United States along with fumigation report from the appropriate authority of the United States," the study said. Bangladesh's Department of Agricultural Extension (DAE) also wants continuation of fumigation rules for cotton imports from the US.

Many countries impose fumigation requirement of cotton. But, almost all of them ask for such fumigation at port of shipment. So far only Bangladesh and Pakistan have imposed such condition for the USA-origin cotton at the port of destination.

Since fumigation takes at least five days to complete the entire process, the fumigation procedure entails not only extra charges on the importer but also forces to pay demurrage for delay in release of the consignment which enhances lead time and local production cost eventually affecting the country's exports.

Bangladeshi cotton importers and spinners have urged the authorities to end this age-old provision of performing double fumigation to save time and money. Recently, the Ministry of Foreign Affairs (MoFA) has favoured relaxing the provision for fumigation test of cotton imported from US.

Bangladesh is heavily dependent on India for its cotton supply but delivery from India remains volatile despite shorter lead time. India also imports cotton from the USA. Bangladesh needs to diversify its import sources since New Delhi often imposes export restrictions on cotton.

Bangladesh should avoid double fumigation of the US cotton in order to reduce dependence mostly on one source and cost of imported cotton as Bangladesh is losing competitiveness of garments in the world market. Such process also weakens Bangladesh's cause when the country is pursuing duty-free exports to the US market.

 

MS Siddiqui is a legal economist.

mssiddiqui2035@gmail.com

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