US Could Suspend Trade Benefits For Bangladesh Over Poor Working Conditions

 @AmruthaGayathri on June 27 2013 7:42 AM
  • Bangladesh garment factory
    File photo of clothes and sewing machines in the Tazreen Fashions garment factor in Savar. Reuters
  • Garment workers
    Garment workers from textile company Envoy Group protest during a strike in Dhaka on June 10, 2013. Reuters
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The U.S. is expected to suspend trade benefits for Bangladesh over poor working conditions and worker safety in the impoverished South Asian country, which saw the world’s worst garment industry disaster in April.

A group of nine Democratic senators has been urging President Barack Obama’s administration to remove Bangladesh from the U.S. Generalized System of Preferences, or GSP, program, which waives U.S. import duties on goods from poor economies.

However, a suspension is not expected to significantly affect Bangladesh, because garments, which account for a majority of the country’s exports, do not qualify for GSP tariff cuts.

“We urge that the administration suspend Bangladesh’s eligibility for GSP and establish a roadmap and timeline for reinstatement based upon tangible improvements in worker safety and related labor law reforms,” the group of senators was quoted as saying by Reuters.

A congressional official, with knowledge of the matter, told Associated Press that the Obama administration would not expel Bangladesh from the program, and that the suspension would be offset by guidelines to improve working conditions for regaining trade benefits.

Although only one percent of Bangladesh’s exports, worth $5 billion, receive U.S. trade benefits, the nation is keen on retaining it, as Obama’s decision could influence an assessment by the European Union, or EU, which is also mulling a suspension of Bangladesh’s trade benefits.

Last year, Bangladesh saved about $2 million in duties on export of $35 million worth of non-garment products to the U.S., while it paid $732 million in duties on $4.9 billion worth of garment exports, Reuters reported.

A suspension by the EU, which provides duty-free privileges for clothing, will have a greater economic impact on Bangladesh’s exports.

Bangladesh’s government has promised measures to improve working conditions and safety after the collapse of the Rana Plaza building in the capital, Dhaka, on April 24, which killed 1,129 people.

Last month, a group of 25 Democratic representatives, in a letter to Bangladesh Prime Minister Sheikh Hasina, urged government action to ensure labor rights and safety.

American retailers with manufacturing operations in Bangladesh, including Gap, JC Penney, Wal-Mart, Target and Kohl’s, have been facing criticism from U.S. lawmakers for not doing enough to improve industrial safety, unlike their European and Canadian counterparts, who have signed a contract that require them to partially pay for building improvements.

Retailers, which have contractually agreed to pay for the upkeep of factory buildings in Bangladesh, include Benetton, H&M, Loblaws, Mango, Marks & Spencer, Primark, Sainsbury's and Tesco.

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