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Uzbek cotton deal on hold over guarantee, price issuesUzbek cotton deal on hold over guarantee, price issues
News added on 06-Mar-2014 in Cotton News

A proposed cotton import agreement between Bangladesh and Uzbekistan has been stalled over issues related to providing guarantee and pricing of products along with lack of interest of private stakeholders, officials of the commerce ministry said.
They said that though the discussion for signing the agreement was going on for more than two years, till now there has been no concrete progress in this connection.
The ministry is also not paying enough importance to go forward with the issue as it has been overloaded with works related to restoration of generalised system of preferences in US market and some other important issues, they said.
Bangladesh Textile Mills Association, the main consumers of the product in the country, is also showing little interest in the proposed structure of the deal, they said.
‘Currently there is no development over signing the agreement,’ a trade expert involved with the negotiation told New Age on Monday.
The progress remained stuck over providing guarantee by Bangladesh for mandatory import of agreed volume of cotton and its pricing, he said.
Uzbek authorities sought guarantee that every year Bangladesh would import the agreed volume of cotton that may be two lakh bales. But problems are that who will provide the guarantee and how the price will be fixed.
Officials of the ministry said that neither the government nor the users of cotton agreed to such conditions while price of the product fluctuates in the international market.
BTMA officials said that they would import cotton considering the price of the product in international markets. So it would not be practical to provide such guarantee.
Both the governments have been working since late 2011 on signing an agreement under which Uzbekistan would export some specific volume of cotton to Bangladesh.
Earlier, Uzbekistan made a proposal to Bangladesh for creating a hub of trading Uzbek cotton in the region by setting up a free warehouse in the country from where they would sell cotton to Bangladeshi users and export to other countries in the region.
‘Bangladesh has recently informed the country that we are not agreed with the proposal and Uzbekistan has also expressed their consent to go forward without warehouse provision in the agreement,’ a commerce ministry official said.
Now, the government will decide whether it will go forward or not as both parties remained rigid over guarantee issue, he said.
BTMA president Jahangir Alamin told New Age that commerce ministry has not informed them of any development in recent time.
‘But we are not agreed to sign the deal in the proposed structure,’ he said.
However, Bangladesh needs to go for such formal agreement with the country to facilitate smooth supply of the product all over the year, he said.
Currently, Bangladesh produces only 1.2 lakh bales of cotton a year which is very insignificant compared with its annual demand.
The country imports more than 39 lakh bales of cotton annually from different countries such as the USA, India, Pakistan, Australia, Uzbekistan and other CIS countries.
Of the quantity, more than 35 per cent of cotton is imported from Uzbekistan through third countries’ traders in Europe which raises the price of the item.

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