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U.S. Government Won’t Renew Bangladesh’s GSP Status

The U.S. government announced, on the eve of the Rana Plaza tragedy’s anniversary, that Bangladesh has not made enough progress on factory safety reform to justify a reinstatement of its preferential status under the Generalized System of Preferences (GSP) program.

In June 2013, the Obama administration suspended Bangladesh’s GSP status in response to revelations that garment factories were maintained in wretchedly unsafe conditions. As a consequence, some goods that were previously covered under GSP, which were eligible for most-favored-nation duty rates, became subject to steep tariffs. However, the suspension was largely symbolic since it has little effect on the garment industry; it only applies to goods like golf equipment, kitchen appliances and ceramics. Bangladesh’s garment industry has never qualified for duty free access to the U.S. market. In fact, 96 percent of all apparel goods are exempt from the U.S.’s GSP status.

At the time of the suspension, United States Trade Representative Michael Froman said, “Our GSP statute requires certain basic standards for worker rights and worker safety as a condition of eligibility. Over the past few years, the U.S. Government has worked closely with the government of Bangladesh to encourage the reforms needed to meet those basic standards. Despite our close engagement and our clear, repeated expressions of concern, the U.S. Government has not seen sufficient progress towards those reforms. 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. While taking this action today, the Administration is also initiating new discussions with the government of Bangladesh regarding steps to improve the worker rights environment in Bangladesh so that GSP benefits can be restored and tragedies like the Rana Plaza building collapse and Tazreen Fashion factory fire can be prevented. The Obama Administration is committed to reflecting American values in our trade policy, including with regard to the rights of workers worldwide.”

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Also, rumors have swirled that, as a symbolic show of protest against Bangladesh’s crawling progress towards improved factory safety and labor conditions, the E.U. might pull its duty free access to European markets, including apparel products. A member of the WTO since 1995, Bangladesh benefits from the E.U.’s “Everything But Arms” arrangement, which allows it duty free access for all exports, excluding arms and ammunition. However, despite intense criticism of its factory safety and labor conditions, Bangladesh will not suffer any revision in its current status under the E.U.’s GSP.

The U.S. government issued a statement that, despite withholding a reinstatement of Bangladesh’s GSP status, it still acknowledges some genuine progress toward reform. “In the last year, the government of Bangladesh has made progress in some important respects. For example, Bangladesh has allowed over 140 unions to register, permitted re-registration of a leading labor rights non-governmental organization that had been stripped of its registration, agreed to an ambitious plan for safety inspections and factory-level monitoring and remediation across the garment sector in collaboration with the ILO, begun the hiring of new labor inspectors, and conducted preliminary safety inspections.”

The U.S. government, however, still considers Bangladesh’s improvements insufficient to justify restoring it to its former preferential trade status. “But there is much more work still to be done. There continue to be concerns about basic worker rights protections under both Bangladesh’s labor law and its special Export Processing Zone law. The Bangladesh government’s hiring of inspectors is lagging, and the results of inspections need to be made publicly available on an easily accessible database. The government of Bangladesh must also do more to ensure protection when workers face intimidation and reprisals for trying to organize. Addressing these issues would help workers secure safer working conditions and better wages and enable Bangladesh to realize its full economic potential.”