US set to suspend Bangladesh trade privileges
Garment plant disaster prompts action to withhold duty-free program.
WASHINGTON — The US is expected to suspend trade privileges for Bangladesh because of concerns over labour rights and worker safety that intensified after hundreds died there in the global garment industry’s worst accident.
Congressional aides said the Obama administration would make its announcement June 27, the culmination of a years long review of labour conditions in the impoverished South Asian nation.
Democratic lawmakers have been pushing for the step. Under the Generalized System of Preferences, Bangladesh can export nearly 5,000 products duty-free to the US, its leading market. While the GSP covers less than 1% of Bangladesh’s nearly $5 billion in exports to the US and doesn’t include the lucrative garment sector, it could deter American companies from investing in Bangladesh.
A congressional official aware of the administration’s thinking on the issue said Bangladesh won’t be expelled from the program, and its suspension will come with some kind of roadmap to enable the restoration of suspended trade privileges if it makes progress on labour issues. The aide spoke on condition of anonymity because the announcement had not been made.
Bangladesh, one of the world’s poorest countries, is anxious to keep the trade benefit. While the immediate economic costs may not be significant, it carries reputational costs and may sway a decision by the EU, which also is considering withdrawing GSP privileges. EU action could have a much bigger economic impact, as its duty-free privileges cover garments.
Bangladesh’s government says it is taking steps to improve worker safety after the April 24 collapse of Rana Plaza in Dhaka that killed 1,129 people, and to amend the nation’s labour law.
The US Trade Representative review of labour conditions in Bangladesh follows a petition filed in 2007 by the AFL-CIO seeking withdrawal of the GSP benefits. The review was expedited late last year amid concern from US lawmakers over deadly industrial accidents, deteriorating labour rights and the April 2012 killing of prominent labour activist Aminul Islam – a case that has not been solved.
Calls for the benefits to be curtailed have multiplied since the Rana Plaza disaster.
Last month, 25 House Democrats wrote to Bangladesh Prime Minister Sheikh Hasina calling for comprehensive action to improve worker safety, and nine Democratic senators urged President Barack Obama to suspend trade privileges but also establish a roadmap and schedule for reinstating them to Bangladesh based on improvements in worker safety and related labour law reforms.
Lawmakers also have criticized US retailers that source garments from Bangladesh for not joining the more than 40 mostly European companies that have adopted a five-year, legally binding contract that requires them to help pay for fire safety and building improvements. The Bangladeshi garment manufacturers’ association says it stepping up inspections and has closed 20 factories.
The garment industry employs some 4 million people in Bangladesh, 80 per cent of them women.