Bangladesh’s trade privilege in US markets has been again denied as President Donald Trump’s administration goes on to enforce the trade preference programme’s eligibility this week. The Generalised System of Preferences (GSP) facility for Bangladesh was suspended in June 2013 after the Rana Plaza building collapse in April, the reasons cited being poor labour rights and unsafe working conditions in factories.
The then Obama administration also gave 16 conditions to be fulfilled for regaining the trade privilege. Bangladesh fulfilled the conditions and twice submitted reports to United States Trade Representative (USTR). But the US has not been reinstating the trade privilege, now citing poor labour rights. Moreover, in this year’s review, Bangladesh could not come out from the list of countries suspended from GSP benefits although some active decisions were taken in the trade preference enforcement programme in 2017. For example, Argentina was being reinstated to the GSP programme, effective from January 1, 2018, following resolution of certain arbitral disputes with US companies. The US also restored the trade benefits to The Gambia and Swaziland under the African Growth and Opportunity Act.
“President Trump has sent a clear message that the United States will vigorously enforce eligibility criteria for preferential access to the US market,” said Ambassador Robert E Lighthizer, the USTR and chief trade negotiator for the Trump administration, in a statement on December 22. “Beneficiary countries choose to either work with USTR to meet trade preference eligibility criteria or face enforcement actions. The administration is committed to ensuring that other countries keep their end of the bargain in our trade relationships,” according to the statement. “We do not expect reinstatement of GSP to the US market anymore as the American Government has been giving newer conditions to be fulfilled by Bangladesh,” said a senior official of the Commerce Ministry asking not to be named.
Even though the 16 conditions had been fulfilled, the US is now demanding changing the labour law for the factories, housed in the export processing zones (EPZ), which is contradictory to the main guidelines of the EPZ law, the official said. Moreover, Bangladesh has already submitted the draft copy of the proposed amendment of the labour law to International Labour Organization for its expert committee’s opinion. Workplace safety in Bangladesh has already been applauded all over the world after the inspection and remediation of the garment factories by the Accord and Alliance through fixing the loopholes in structural, fire and electrical aspects, the official said.
The US is the single largest export destination for Bangladesh. As a least developed country, 97 per cent of goods originating from Bangladesh enjoy duty-free benefits on export to US markets as per the decision of the Hong Kong Ministerial Meeting of World Trade Organization in 2005. However, the country’s main export item, garments, has not been included in this “97 per cent package” although garment items comprise 95 per cent of Bangladeshi exports to the US in a year. As a result, Bangladeshi exporters face 15.62 per cent duty on export of apparel items to the US markets although some competing countries like China, Vietnam, Pakistan and India face much less. The US Government does not allow GSP on apparel items from any country and the duty differs from one country to another.
In 2012, the total value of imports from Bangladesh to US under GSP was $34.7 mn. The top imports under GSP from Bangladesh included tobacco, sports equipment, porcelain China and plastic products. The GSP programme saved American companies nearly $730 mn in import duties in 2016 and is on track to save even more in 2017, according to American Apparel Footwear Association (AAFA). When GSP expired from August 2013 to July 2015, US companies paid $1.3 bn extra in taxes while awaiting congressional reauthorisation, AAFA said.