The General System of Preferences (GSP) which was suspended by the US in June 2013 after the tragedy of Rana Plaza damaged the reputation of Bangladesh in grossly neglecting the safety and protection of garment workers. . Moreover whatever action the US takes, the European Union picks up and follows. However this time so far the EU has not suspended its GSP to Bangladesh garments. The effect of the suspension of GSP for Bangladesh exports (tobacco products, sports gears, tents, kitchen appliances and plastic products) was small amounting to about $26.3 million
There was a high hope that Bangladesh would receive positive reaction on the restoration of GSP from the US delegation at the Ticfa (Trade Investment Cooperation Framework Agreement) meeting which was held in Dhaka on 28th April. The meeting clearly demonstrated that Bangladesh and the US had completely different agenda and expectations.
To restore the GSP, the US delegation stated that much work remained to be done in the garment sector for safety of workers. At the meeting, the US delegation came up surprisingly with a proposal of constituting two panels on labour and women to ensure due rights for garment workers and increase women’s participation on the economy of Bangladesh. The proposal was seen as a delaying tactics to restore the GSP facilities to Bangladesh.
Bangladesh also wanted quota and duty free access of all Bangladeshi goods as being a Least developed country (LDC) to the US market under the Bali package of WTO reached last November, the US delegation reportedly stated that the LDC’s access to the US market was tied with WTO’s further negotiation and completion.. It is noted the US has provided duty-free and quota free access to some LDCs in Sub-Saharan and Caribbean countries, but the benefit has never been provided to Bangladesh. On the other hand, at the meeting, the US wanted reduction of tariff structure of fire, electrical and structural equipment, as Bangladesh would have to import them to ensure workplace safety and Bangladesh had drastically reduced the tariff on fire and safety equipment. The US got what they wanted for their exports to Bangladesh. The question is: why was the negative stance of the US at the meeting?
The main reason appears to be that the relationship between Bangladesh and the US has been going through severe strains because of their reservation of the outcome of non-inclusive 5th January election which returned the Prime Minister Sheikh Hasina to power after the main opposition party boycotted the vote and no congratulatory message from the US has come as yet to the Prime Minister.
Nisha Biswal, the assistant secretary of state for South Asia, reportedly on 30th April. stated to the House Foreign Affairs subcommittee chaired by US Representative Steve Chabot that the United States would keep pressing Bangladesh to resolve intense feuding…We believe that all of the gains that Bangladesh has made in its economy, in its development trajectory, that all of those gains are fragile and unsustainable in the long term if it does not have political stability, and political stability is not possible without some greater degree of political inclusion.”
Chabot reportedly said “If it’s not resolved, I’m afraid the violence is going to escalate and an ally — a good ally of the United States and one that has kind of traditionally been looked upon as a model for a moderate Muslim country — could become just the opposite,”
The uneasy relationship between the two countries has also been corroborated by the Finance Minister AMA Muhith who on 26th April reportedly asserted that Bangladesh’s political ties with the US were not in a “comfortable” state though its ties in the economic field are okay. Muhith also said the relations between the two countries have always been “cold” and the government is trying to make them “a bit soft”, at least on the economic front. There is another reason which the US administration did not disclose at the Ticfa meeting to Bangladesh authorities that since its introduction in 1974, the GSP program has required periodic renewals by the Congress.. The current GSP expiration date is July 31, 2013. The House of Representatives introduced a bill on July 17 extending GSP to September 30, 2015.
The Senate followed with an identical bill on July 18, but it is still not certain that the bill will make it through both houses and land on President Obama’s desk. It is reported that that GSP bill is tied with President Obama’s request that TPA (also known as “fast track”) is needed to implement the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership agreements currently under negotiation.
However, some lawmakers are working to generate opposition to TPA in the belief that Congress should not cede its constitutional authority to regulate commerce. It is reported that given that congressional priorities lie elsewhere, few if any of the trade-related bills including that of GSP are likely to be taken up in the near future. Therefore the restoration of GSP for Bangladesh appears to be remote. Let us see whether the EU follows the US steps.
Source: The Daily Star
