US suspends GSP for Bangladesh
In a chilling warning, the US yesterday suspended trade privileges for Bangladesh after a six-year review exposed “serious shortcomings” in safety and labour standards.
The decision will bring tariffs back on some of Bangladesh's exports to US markets under the programme known as the Generalised System of Preferences. However, the scheme does not apply to Bangladesh's main export: garment.
The suspension underlines the lack of progress by the government in improving factory conditions.
“I have determined that it is appropriate to suspend Bangladesh's designation as a beneficiary developing country under the GSP programme because it is not taking steps to afford internationally recognised worker rights," US President Barack Obama said in a message to the Congress.
The US government “has not seen sufficient progress” toward basic safety standards, despite its “close engagement and clear, repeated expressions of concern” with the Bangladesh government over the past few years, US Trade Representative Michael Froman said in a statement.
“The recent tragedies that needlessly took the lives of over 1,200 Bangladeshi garment factory workers have served to highlight some of the serious shortcomings in worker rights and workplace safety standards in Bangladesh.”
The Obama administration plans to initiate new discussions with the Bangladesh government on steps to improve the working environment so that GSP benefits can be restored and tragedies like the Rana Plaza collapse and Tazreen fire can be prevented, Froman said. "There is no particular timetable in mind."
The suspension will be effective 60 days after the publication of the proclamation in the Federal Register.
Analysts say the suspension of trade benefits will pressure Bangladesh to improve working conditions in garment factories.
To American retailers like Wal-Mart and Gap, it comes as a reminder of the need to sign the building and fire safety accord that pledges to finance factory upgrades in Bangladesh.
The move came after the US' largest trade union, American Federation of Labour and Congress of Industrial Organisation (AFL-CIO), filed a petition with the USTR in 2007 questioning Bangladesh's eligibility for GSP.
“The government of Bangladesh has been too neglectful for too long, shirking its duty to protect the very workers who are the backbone of the Bangladeshi economy and make it grow,” Celeste Drake, trade and globalisation policy specialist at the AFL-CIO, said in a statement yesterday.
The workers' safety issue gained momentum after the Tazreen fire that killed 112 workers last November.
The Rana Plaza collapse that killed more than 1,100 workers on April 24 intensified calls from different quarters, including US senators, for trade benefits to be curtailed.
Besides, the killing of labour leader Aminul Islam in April last year influenced the USTR to withdraw the trade privilege.
Since 2005, over 1,800 workers have died in preventable factory fires and building collapses in the garment industry.
Workers died because the government and industry violated safety standards to cut costs, while global apparel brands demanded production at the lowest prices in the world, AFL-CIO said.
“The global workplace cannot be a death trap for poor workers producing products for the global economy,” it said.
But AFL-CIO hopes that the suspension of GSP benefits will be a catalyst to accelerate changes for the better: stronger worker protections, a voice at work and safe work places.
Commerce Secretary Mahbub Ahmed declined to comment but only said his ministry was not yet officially informed about the outcome of the GSP hearing. Ahmed led a 13-member team to the USTR hearing in Washington on Bangladesh's trade benefits on March 28.
Due to the suspension of the GSP, a duty waiver scheme adopted in 1976 by the US government for more than 5,000 goods from least developed and developing countries, Bangladesh will lose competitiveness in the US market.
Although Bangladesh exports less than 1 percent of $5 billion annually under the GSP to the US market, the impact of the withdrawal is significant. This is because some other countries in the European Union, where the country enjoys duty waiver, might be influenced by the US decision.
The economic impact of the withdrawal could have been much deeper if the garment products had been included in the GSP package. Since garments are not covered by the scheme, Bangladeshi apparel exporters have to pay 15.3 percent duty to enter the US market.
The Bangladesh government had tried to convince the US government for retaining the GSP through taking various steps.
Apart from hectic diplomatic negotiations with Washington, the government has moved to amend the labour law of 2006 in April to ease the conditions of trade union in the garment sector. But parliament is yet to pass the law, which now appears to be a setback.
Bangladesh also approved the Trade and Investment Cooperation Forum Agreement last week to hold talks to settle trade disputes with the US.
The labour and employment ministry has already formed a six-member panel on May 12 to recommend the minimum wage for garment workers.
But these efforts were far from enough to appease US officials who said they considered the suspension of trade benefits as "the last resort.”
The US Congress added workplace safety and other worker rights criteria to eligibility requirements of the GPS programme in the 1980s. At least 13 countries have been suspended from the programme since then on labour grounds, Reuters reported.
Most were later reinstated, but Belarus, Sudan, Syria and Myanmar remain out.
The Obama administration is currently considering whether to restore GPS benefits for Myanmar in recognition of recent political reforms in the Southeast Asian country, but some human rights groups warn that it is still premature.
Comments