Bangladesh Loses U.S. Trade Favors, Retains Aid on Labor Rights

Inside a Bangladeshi garment factory.
Inside a Bangladeshi garment factory.

Washington,
June 28, 2013

President Obama notified the U.S. Congress June 27 that he will suspend tariff benefits for Bangladesh, citing a section of the relevant law disallowing such benefits to nations where worker rights are below international standards.

The president’s action comes in response to a garment factory collapse in Bangladesh in April that killed more than 1,100 workers. A factory fire in November 2012 took the lives of more than 110 workers.

“I have determined that it is appropriate to suspend Bangladesh’s designation as a beneficiary developing country under the GSP [Generalized System of Preferences] program,” the Obama message to Congress said, “because it is not taking steps to afford internationally recognized worker rights to workers in the country.”

U.S. Trade Representative Michael Froman issued a statement further explaining the decision and recounting how the United States has advised the Bangladeshi government on how to achieve work standards on par with global practices. “Despite our close engagement and our clear, repeated expressions of concern, the U.S. government has not seen sufficient progress towards those reforms.”

The United States continues to help Bangladesh create the worker rights environment that will allow reinstatement of the trade benefits, Froman said.

U.S. officials expressed concern about working conditions in Bangladesh factories in early May soon after the collapse of the Rana Plaza facility. State Department officials said there was an urgent need for government, business owners, buyers and labor organizations to work together to improve the lives and working conditions of Bangladeshi workers.

A State Department media note of May 9 said that “both the United States and Bangladesh have a shared interest in ensuring that the growth of Bangladesh’s export sector does not come at the expense of safe and healthy working conditions or fundamental labor rights.”

After China, Bangladesh is the world’s second-largest exporter of apparel goods, with billions of dollars of goods sold to the United States alone. The State Department is urging U.S. buyers of Bangladeshi goods to work with the government, the Bangladesh Garment Manufacturers and Exporters Association, labor groups and others to improve factory safety and increase inspections of workplaces for compliance with safe practices.

The U.S. Agency for International Development (USAID) and the U.S. Department of Labor have been involved in campaigns to strengthen worker rights in Bangladesh. For example, the Labor Department is helping Bangladeshi policymakers improve the labor law framework and cooperative labor-management relations. The department is also helping the government better enforce fire and building safety standards and is training workers’ groups to effectively monitor those efforts.

Congress created the trade preference program in 1974, allowing certain goods to enter the U.S. markets without duty fees. The program is a means to help developing countries expand their economies.

Bangladesh exported about $34.7 million worth of products to the United States under the GSP program in 2012, including some clothing products, tobacco, sports equipment and plastic products. The United States will continue to accept imports from Bangladesh following this decision, but they will not be eligible for duty-free status.