US suspends GSP facility to Bangladesh

28 Jun '13

2 min read

US President Barack Obama has suspended preferential trade benefits, or the GSP status, to Bangladesh following poor labour practices followed by that country, as witnessed in the April 24 collapse of a garment factory building that killed over 1,100 people.

In a Technical Trade message to the US Congress, President Obama said, “I am providing notification of my intent to suspend the designation of Bangladesh as a beneficiary developing country under the Generalized System of Preferences (GSP) program.”

The decision has been taken in accordance with Section 502(b)(2)(G) of the 1974 Act (19 U.S.C. 2462(b)(2)(G)), which provides that the President shall not designate any country a beneficiary developing country under the GSP if such country has not taken or is not taking steps to afford internationally recognized worker rights in the country (including any designated zone in that country).

“I have determined that it is appropriate to suspend Bangladesh's designation as a beneficiary developing country under the GSP program because it is not taking steps to afford internationally recognized worker rights to workers in the country,” the President said.

The suspension of GSP facility for Bangladesh will begin in about 60 days, and would lead to an increase in US import duties on some Bangladeshi products.

The GSP waives US imports duties on several thousands of items from least developed counties, as an effort to spur economic development in those nations.

The decision by President Obama to withdraw GSP facility to Bangladesh has come a day after nine US senators urged the President to do all within his power to pressure Bangladesh to support safer working conditions.

Although the GSP facility was applicable to less than 1 percent of all products exported by Bangladesh to the US, the latest decision may deter American companies from investing in the South Asian nation.

It might also influence the European Union, which is considering withdrawal of its GSP facilities to Bangladesh. If the EU goes the US way, it could negatively impact Bangladesh’s economy, as EU duty-free privileges under the GSP cover readymade garments, which make up bulk of Bangladesh’s exports.

Meanwhile, Bangladesh’s Ministry of Foreign Affairs has termed the US withdrawal of GSP facility as “unfortunate”. In a statement, the Ministry said it is shocking that the decision to suspend GSP has come at a time when the Bangladesh Government has taken visible and concrete measures to protect workers’ rights and improve safety and work conditions.

Fibre2fashion News Desk - India

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