US Suspends Trade Preference Benefits For Bangladesh

WASHINGTON (TIP): President Barack Obama announced on June 27 the suspension of US trade privileges for Bangladesh because of concerns over labor rights and worker safety that intensified after hundreds died there in the global garment industry’s worst accident. In a proclamation, Obama said that Bangladesh was not taking steps to afford internationally recognized worker rights to employees in the South Asian country.

US Trade Representative Mike Froman said the US will, however, start new discussions with Bangladesh on improving workers’ conditions so the duty-free benefits that cover some 5,000 products can be restored. He didn’t say when that might be, saying it would depend on Bangladesh’s actions. Thursday’s announcement was the culmination of a yearslong review of labor conditions in the impoverished country.

Democratic lawmakers have been pushing for the step since the April 24 collapse of Rana Plaza in Dhaka that killed 1,129 people. In November, a fire at a garment factory killed more than 100 people. “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,” Froman said.

The Generalized System of Preferences, that is designed to boost the economies of developing nations, covers less than 1 percent of Bangladesh’s nearly $5 billion in exports to the US, its largest market. The benefits don’t cover the lucrative garment sector but Bangladesh’s government was anxious to keep them. The action may not exact a major and immediate economic impact, but it carries a reputational cost and might deter American companies from investing in the country, one of the world’s poorest.

The US action, which takes effect in 60 days, may also sway a decision by the European Union, which also is considering withdrawing GSP privileges. EU action could have a much bigger economic impact, as its duty-free privileges cover garments, which account for 60 percent of Bangladesh’s exports in that sector. The US Trade Representative review of labor conditions in Bangladesh follows a petition filed in 2007 by the AFL-CIO seeking withdrawal of the GSP benefits.

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The review was expedited late last year amid concern from US lawmakers over deadly industrial accidents, deteriorating labor rights and the April 2012 killing of prominent labor activist Aminul Islam — a case that has not been solved. Froman said despite close engagement with Bangladesh to encourage labor reforms, the US hasn’t seen sufficient progress. But he said the US is “committed to working with the government of Bangladesh to take the actions necessary to rejoin the program.” Bangladesh maintains it is doing all it can, by closing dangerous factories and moving to amend its labor law.

Calls from both House and Senate Democrats for the US benefits to be curtailed had multiplied since the Rana Plaza disaster, and some of those lawmakers quickly welcomed Thursday’s decision. Democrat Rep. Joe Crowley, who is cochair of the congressional caucus on Bangladesh, said that in light of recent tragedies in the country, the suspension was “inevitable.” “I hope this action will propel Bangladeshi officials to develop a clear path forward that protects all workers in Bangladesh,” he said.

Robert Menendez, chairman of the Senate Foreign Relations Committee, said it was long overdue for Bangladesh to reform its labor practices and ensure workers’ rights. “Bangladesh is an important trading partner, but we cannot and will not look the other way while workers are subjected to unsafe conditions and environments endangering their wellbeing,” Menendez said in a statement. He also called for American companies operating in Bangladesh to improve conditions for factory workers and work with European companies on a global standard for safety.

Lawmakers 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 percent of them women.

Mike Posner, a former senior US official and professor of business and human rights at New York University’s Stern School of Business, appealed to US and European firms to work with Bangladesh in the urgent task of improving working conditions in the garment sector. “The message should be not to bail out but to stay the course and make a sustained commitment to Bangladesh, otherwise things will never get better,” he said.

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