ELUSIVE REGAINING OF GSP BENEFITS IN THE USA | The Daily Star
12:00 AM, August 13, 2015 / LAST MODIFIED: 12:00 AM, August 13, 2015

ELUSIVE REGAINING OF GSP BENEFITS IN THE USA

The honourable Minister for Commerce Tofail Ahmed has appositely diagnosed that the Government of the United States of America's exclusion of Bangladesh from the new list of 122 beneficiaries of the Generalised System of Preferences (GSP) scheme is motivated by politics. He also has a very valid point that countries with no better record in the promotion of human rights or labour rights, have been kept in the list of eligible countries, but Bangladesh has been left out. Indeed, like many, I have felt and publicly written that the decision to withdraw Bangladesh from the list of beneficiaries had more to do with politics than with the professed moral reasons cited by the United States Trade Representative (USTR) that is the lack of adequate provisions upholding labour rights or safety at work. I harbour this cynicism because while the allegations of lack of safety at work was mainly about the garment industry, almost none of the products of this industry was ever eligible for GSP. Thus, it was like punishing your innocent neighbours for flaws of some other neighbours, although the former group has no nexus to the latter with regard to the flaw in question, apart from the two groups being located in the same neighbourhood.

Accordingly, I, for one, would concur with Mr. Ahmed's diagnosis, but despite agreeing with  it, it is disappointing that he has not offered any real explanation for the failure of the so-called intense diplomatic efforts (not to say the spending of public money) made by the Government of Bangladesh to regain GSP in the market of the USA. It is also possible that the American importers of Bangladeshi products, which benefited from the GSP to Bangladesh, have not been engaged by our lobby groups as much as they could have been. After all, as pointed out by Mr. Mozena, the former Ambassador of the USA to Bangladesh, the import duties are paid by the importers.

While some want to dismiss any link, arguably it is now apparent that the candid (at times bordering on undiplomatic) public remarks of some of our ministers and high-ups in the party in power, have further antagonised the administration of the USA, and now it is evident that those have not done any service to the bid for regaining the GSP. It is also a clear sign that the Trade and Investment Cooperation Forum Agreement (TICFA), which was touted as an avenue for improving bilateral strategic and trade relations between the USA and Bangladesh, has achieved nothing on the front of GSP. 

GSP is always riddled with the subjectivity of the benefit granting countries. Indeed, trade analysts would recognise that this element of subjectivity is one of the fundamental problems with the GSP regimes. While in theory, it has been set up as a mechanism for promoting economic development, financial, and trade needs of developing and least developed countries; in practice, not so infrequently it has been used as a mechanism for promoting non-trade, social or arguably moral preferences of the benefit granting countries with no direct or discernible linkage to the needs of the beneficiaries of the schemes. For example, the USTR website proudly proclaims “GSP promotes American values.” Thus, GSP can always potentially be used as a leverage to pressurise a regime willing to benefit from the scheme to concede to the demands of the benefit granting country.

The limits of GSP and the leeway granted to GSP granting countries were clearly manifest when India challenged the Drug Arrangements of the EU, granted under its GSP scheme. India claimed that more benefits were enjoyed by Pakistan as compared to India, which was a violation of the non-discrimination provision of the General Agreement on Tariffs and Trade. This was accepted by the Panel of the World Trade Organization (WTO). However, on appeal, the Appellate Body (AB) found the EU's scheme non-compliant on a narrow technical ground (that being the list of the EU was a close-ended one), interpreting the relevant WTO rules in such a way that the preference granting countries can unilaterally determine the list of beneficiaries and criteria for inclusion in the list. And such unilateral determination would not fall foul of the WTO rules on non-discrimination. 

While I, as an academic or researcher, may be within my rights (or constrained) to limit my analysis of a perennial problem to its diagnosis, it is dismaying when Mr. Ahmed takes such a limiting route. After all, academics can only ask questions and try to find answers; more often than not it would be beyond their powers to act on those answers and to have any direct bearing on policymaking. Perhaps, one of the age old allegations hurled at the academic approach to many real world problems is that it fails to solve them. Suffice to say that the policymakers with all their clout are expected to accomplish more tangible and practical goals, however daunting those may be. Maybe this ardent need for pragmatism is one of the many points that can make policymaking and diplomatic negotiations an arduous task. Thus, while the value of GSP access to the US market in direct economic terms is nominal (because of the limited coverage of eligible goods with export potential), simply blaming the USA administration would be of little use for our industries. After all, the GSP beneficiary status in the USA has some practical value and that has prompted our policymakers to invest their resources in regaining it.

The writer is an Assistant Professor of Law at BRAC University.

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