Bangladesh RMGs under US review for alleged counterfeits

After the United States initiated a special review of Bangladesh’s garment exports, it began a special review to determine whether the country was exporting fake clothing from French and American brands.

The United States Trade Representative (USTR) started the Special 301 Review on IPR (intellectual property rights) Protection and Enforcement – which looks into the global state of IP protection and enforcement – after complaints of counterfeiting emerged against Bangladesh-made clothes, according to a document obtained by this newspaper. 

The commerce ministry objected in its first rebuttal to the review. It claimed it was not logical to do this without providing evidence.

Garments manufacturers claim that they have never engaged such practices. 

However, Bangladesh, if the allegation proves true, will need to face multiple forms of sanctions according to exporters and officials at commerce ministry.

This review was prompted by complaints from the American Apparel and Footwear Association, an influential organization of American brands, and Paris-based Union des Fabricants, which promotes international intellectual property protection against counterfeiting.

The US State Department notified Bangladesh on February 10th about the review 301. It asked Bangladesh to submit its submission by midnight Washington time on February 13.

Bangladesh, for its part, has sent its primary response to the Ministry of Commerce’s stakeholder meeting. Tapan Kanti, the senior secretary, was in charge of this meeting. 

Hafizur Rahman (director general of WTO Cell of Ministry of Commerce), was present at the meeting and told The Business Standard that the detailed submission would need to be submitted within 15 days. A description of the anti-counterfeiting initiatives taken by Bangladesh will also be included.

This is the US’s first attempt to review any LDC. 

AAFA also stated that the Rapid Action Battalion (and the Criminal Investigation Department of the Police) have not prioritized IP (intellectual Property) enforcement actions. 

The AAFA requested the US State Department to maintain Bangladesh on a priority watchlist. 

Mohammad Hatem was the executive president of Bangladesh Knitwear Manufacturers and Exporters Association. He was also present at this meeting. The US decided to review several countries including China, Vietnam, and the United Arab Emirates. 

He indicated that the review could lead both to additional duties and quotas on exports of garments.

He assured that Bangladesh would investigate and take disciplinary actions against the suspects.

“The BGMEA (and BKMEA) will take a hard stance in that regard. He said that we have not given discounts to counterfeiters and will continue to do so in the future. 

These are the allegations

According to the AAFA, Bangladesh is a significant legitimate sourcing country for the sector. However, counterfeits are being seized from Bangladesh at an increasing pace globally because of the growing counterfeit production. As one member shared, ‘…it remains impossible to conduct any form of IP enforcement in Bangladesh due to zero established IP policies’ with high levels of corruption exacerbating the situation. AAFA recommends Bangladesh be included on the Priority Watch List of USTR.

The AAFA noted that the group had 56 global seizures in 2022 that included counterfeit goods made in Bangladesh. This was a 50% increase on 2021. 

It also included 12 countries in which counterfeit goods from Bangladesh were seized. These include Australia, Italy and the United States.

It stated that 100% of the nearly 175,000 items confiscated in 2022 in 17 raids in Malaysia, the Philippines, were made in Bangladesh. 

The AAFA warned, “allowing Bangladeshi counterfeits to grow will make the residual effects harder to undo on a greater scale.”

It found 5,000 listings that were linked to counterfeit Bangladeshi goods on social media platforms like Facebook, LinkedIn, Whatsapp and Shopee.

“While seizures from across the globe can be traced back to Bangladesh, the two law enforcement agencies that have the authority to conduct IP enforcement actions in Bangladesh – the Rapid Action Battalion (RAB) and the Bangladesh Police Criminal Investigation Department (CID) – do not prioritise IP enforcement action and suffer from corruption.”

Response from Bangladesh

Bangladesh is an LDC and has some flexibility regarding intellectual property rights. Officials at the Ministry of Commerce said that Bangladesh has already implemented the Trademark Act. In this Act, counterfeiting is a criminal offense.

It will also indicate that such a practice was a crime under the Customs Act.

The ministry will acknowledge that export consignments may not have been as well checked as import consignments.

It will also argue that the customs authorities in the countries where counterfeit clothing is imported are responsible for stopping them. 

Ministry officials stated that counterfeit products displayed under Bangladesh laws, digital or otherwise, would be punished. However, it is up to the concerned countries to punish those who sell or import counterfeit products from other countries.

Bangladesh was planning to implement the IP Rights issue in phases by 2026. This will require more capacity from Bangladesh. The assistance of different countries will also be needed.

Through trouble

TBS spoke with Dr MA Razzaque, the Policy Research Institute’s research director, to explain that the US could impose penalties through this review, raise tariffs or impose additional sanctions.

He claimed that IP issues were dominating global discourse. 

“The US-China tech war has already begun. This will have a negative affect on vulnerable countries such as ours. The US is much more aggressive now on IPR issues. Bangladesh should also investigate UNIFAB’s complaints.”

Due to US objections, no WTO Appellate Division judge can be appointed for trade-related disputes settlement. The US can unilaterally impose a decision and then it will be challenged at the WTO’s Dispute Settle Court. This is why no solution can be found.

Shams Mahmud (chairman of the standing committee for foreign affairs of Bangladesh Garment Manufacturers and Exporters Association) told TBS that there is no room for members of the BGMEA to commit such irregularities. They must provide documentation during export to prevent the export of counterfeit goods. This is a very strict requirement by the BGMEA. Some counterfeit products come from overseas, however.

He stated that if such a violation was committed, it could only be done by members of the association. 

TBS was granted anonymity by a factory entrepreneur who said that sometimes there were stocks left which can be sold on the open market. These products are sometimes bought by foreigners and sold in their country. He said that some products may be subject to this process, and added that it was up to the customs department to determine if this is true. 

He said that the Covid-19 order cancellations and the Bangladesh export stoppage could have resulted in more stocks, which may have allowed for more products to reach foreign markets through black market channels.

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