US set to suspend Bangladesh’s GSP

US set to suspend Bangladesh's GSP

After a six-year review of safety standards and labour conditions, the US was set to suspend duty waiver for Bangladesh yesterday, in a move that will hurt the country’s exports to American markets, media reports said.
The decision waiting to be announced will slap 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 cover Bangladesh’s main export: garment.
The suspension underlines the lack of progress by the government in improving factory conditions.
The office of the United States Trade Representative (USTR) declined to comment. Administration and Congressional officials said the official announcement would come later on Thursday, The New York Times reported.
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.
US set to suspend Bangladesh's 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.
Following 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 US government’s action came against the backdrop of Bangladesh’s inadequate labour practices and its failure to comply with the legal requirements to stay in the GSP programme, according to Drake.
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.
Bangladesh government had tried to convince the US government for retaining the GSP through taking various initiatives.
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.
The Bangladesh cabinet also approved the much-talked-about 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 committee on May 12 to recommend the minimum wage for garment workers.

Source: The Daily Star