Gsp Facility Of Bangladesh 3t1k2y

Contents Introduction: ........................................................................................................................................... 2 GSP facility of Bangladesh:...................................................................................................................... 3 Importance of Bangladesh to the US economy ...................................................................................... 5 Advantage of GSP:................................................................................................................................... 6 Suspension of GSP:.................................................................................................................................. 7 Reasons behind US suspension of GSP for Bangladesh .......................................................................... 7 Impact ..................................................................................................................................................... 9 Getting back the GSP: ........................................................................................................................... 10 A new hope: .......................................................................................................................................... 12 A road map to restore GSP facility ........................................................................................................ 13 Conclusion ............................................................................................................................................. 14 Reference: ............................................................................................................................................. 16

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Introduction: The Generalized System of Preferences, or GSP, is a formal system of exemption from the more general rules of the World Trade Organization (WTO), (formerly, the General Agreement on Tariffs and Trade or GATT). Specifically, it's a system of exemption from the most favored nation principle (MFN) that obliges WTO member countries to treat the imports of all other WTO member countries no worse than they treat the imports of their "most favored" trading partner. In essence, MFN requires WTO member countries to treat imports coming from all other WTO member countries equally, that is, by imposing equal tariffs on them, etc. The U.S. Generalized System of Preferences (GSP) is a program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 5,000 products when imported from one of 126 designated beneficiary countries and territories. The GSP program also s U.S. jobs. U.S. businesses imported $19.9billion worth of products under the GSP program in 2012, including many inputs used in U.S. manufacturing. According to a 2005 U.S. Chamber of Commerce study, over 80,000 American jobs are associated with moving GSP imports from the docks to farmers, manufacturers, and retail shelves. GSP was instituted on January 1, 1976, by the Trade Act of 1974. Products that are eligible for duty-free treatment under GSP include: most manufactured items; many types of chemicals, minerals and building stone; jewelry; many types of carpets; and certain agricultural and fishery products. Among the products that are not eligible for GSP duty-free treatment is: most textiles and apparel; watches; and most footwear, handbags, and luggage products. From the perspective of developing countries as a group, GSP programs have been a mixed success. On one hand, most rich countries have complied with the obligation to generalize their programs by offering benefits to a large swath of beneficiaries, generally including nearly every non-OECD member state. Certainly, every GSP program imposes some restrictions. The United States, for instance, has excluded countries from GSP coverage for reasons such as being communist (Vietnam), being placed on the U.S. State Department's list of countries that terrorism (Libya), and failing to respect U.S. intellectual property laws. Criticism has been leveled noting that most GSP programs are not completely generalized with respect to products, and this is by design. That is, they don't cover products of greatest export interest to low-income developing countries lacking natural resources. In the United States and many other rich countries, domestic producers of "simple" manufactured goods, such as textiles, leather goods, ceramics, glass and steel, have long claimed that they could not compete with large quantities of imports. Thus, such products have been categorically excluded from GSP coverage under the U.S. and many other GSP programs. Critics assert that these excluded products are precisely the kinds of manufactures that most developing countries are able to export, the argument being that developing countries may not be able to efficiently produce things like locomotives or telecommunications satellites, but they can make shirts. ers note that even in the face of its limitations, it would not be accurate to conclude that GSP has failed to benefit developing countries, though some concede GSP has benefited developing 2

countries unevenly. Some assert that, for most of its history, GSP has benefited "richer developing" countries - in early years Mexico, Taiwan, Hong Kong,Singapore, and Malaysia, more recently Brazil and India - while providing virtually no assistance to the world's least developed countries, such as Haiti, Nepal, and most countries insub-Saharan Africa. The U.S., however, has closed some of these gaps through supplemental preference programs like the African Growth and Opportunity Act and a newer program for Haiti, and Europe has done the same with everything but Arms.

GSP facility of Bangladesh: One of the important sector of the economy of Bangladesh readymade garments (RMG) industry now in great threat. United States considering the working atmosphere of labor and their rights, they can cancel the GSP (Generalized System of Preference ) 'priority entry rights' in exporting of RMG. Under the provision GSP facilities the special tax free entrance in the US market those availed by Bangladesh, if those are cancelled then our flourishing economy may be affected. As a lion portion of our export earnings comes from the RMG sector. At present we have five thousands garments factories in our country. Many lakhs of people are working in these factories and most of them are female labors. Two crores of peoples are directly or indirectly depended on garment industries for their earning. So there is a possibility and fear of bad effect in the socio-economic structure of the country if the facilities of GSP cancelled. In the meantime trade representative of US Ron Clerk has informed the Government of Bangladesh through a letter about the beginning of working process of cancellation of GSP facilities. It has been apprehended from long times. The RMG industries has been widely flourishing since last two decades in our country. But in the most of the cases importance has not been given to the working atmosphere and facilities for labors in the factories. But one of the largest buyer US and countries of European Union always desire that garments labors can work in healthy free atmosphere. Every floor will be equipped with the fire extinguisher facilities and in spite of this sufficient facilities of exit, if the fire exists. But it is unfortunate that, the owners on the RMG industries did not given attention towards the facilities of labors. Due to these reasons dissatisfaction of labors continue in RMG industries for last few years. In every year many occurrence of fire been occurred in garment industries. Many lives of labors lost due this type of occurrence. But the death of labors due to fire in Tazrin garment factory of Ashulia few month ago, this news has been focused through media most of the world. After this including US and many others from different parts of the world raise question about the working atmosphere, condition of labors and their facilities in garment industries. Now it is necessary to take all out efforts to change mind of US. In the mean time the ambassador of Bangladersh in US has discussed with the concerned authorities and leaders to reconsider GSP facilities for Bangladesh. From the Bangladesh side assurance has been given regarding the fair investigation about the killing of labor leader Aminul Islam. All concern hope that the competent authority will do their best to continue the GSP facility for Bangladesh.

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In the year of 2007 the largest labor organization US, American Federation of Industrial Labor Organization (AFILO) raised objection about GSP. After the hearing about this issue Bangladesh has regain the facility of GSP continuously. But after firing occurrence in Tazrin Fashion recently the question raised about the GSP facility. In this connection the Commerce Division of US sent a letter to the Commerce Ministry of Bangladesh and wanted to know about latest progress related to the four factors - the labor standard in shrimp and garment sector, child labor in shrimp sector, fire security and labor rights in EPZ area. In this regard our Commerce Secretary mentioned that,' as a remarkable progress has been made in these four sectors, so a satisfactory answer may be placed to them. They desired to get answer by the January30, 20013 and we hope, the concerned responsible divisions will be able to place their by the stipulated time'. But if we could not do so, we had to face a great loss to our export sector.

Many products of Bangladesh got the GSP facilities as a less developed country (LDC). Under this GSP facility 26.03 millions of US $ commodities are exported to US from Bangladesh. If the GSP facility withdrawn, any immediate economical effect will not shown in the economy of Bangladesh. Because among export products to US major portion occupied by the RMG, that are not getting tariff facilities. But it will be the fact related to the losing of our image to the outside world. Because due to the incidence of extreme fire in Tazrin Fashion the famous companies all over the world those facing bad discussion regarding the importing RMG from Bangladesh. The event of killing of labor leader Aminul become related with this. The imposing of restriction in the formation of labor union in EPZ be considered as a violation of labor rights. It will not be fair to avoid the advice of international organizations and import organizations by giving attention to some owners of our RMG. It is surprising that till the date the owner of Tazrin Fashion not been arrested. It is true that the in comparison to international standard Bangladeshi labors got small amount of salary, even the less amount from China and Vietnam. But Bangladesh is in a good position in comparison to the child labor. From a report it has been noted that, in Bangladesh 15% child labor exist among the total labor force and in Maxico it is 16%. Though, the US has an agreement of NAFTA ( North America Free Trade Association ) with Maxico. Many express their views that US is mainly making this pressure for making agreement on TICFA ( Trade and Investment Cooperation Agreement ). For last two years a silent ups and down is continuing among the governments of the US and Bangladesh. It seems that, there are many chapters included in TICFA agreement those may be to the interest of the country. Though the Commerce Secretary has indicated that the letter send from the US commerce division nothing has been mentioned about TICFA. But it has been assumed by a portion of the intellectuals that the GSP facilities may be used as a tramp card by the US commerce division. In this connection it may be that none of the impotent country has signed the TICFA agreement till the date. But it should taken in mind that 40% of our total export goes to US. We should proceed the road considering all sides around of us. It has been informed that, 12 Democrat Congress Member have wrote to the USTR ( United States Trade Representative ). In this connection US has informed the matter to Bangladesh government. In near future circulation letter will be issued regarding the withdrawal of GSP. The foreign minister Dr Dipu Moni has informed regarding the issuing of letter related to withdrawal of GSP that, only 10% of our export business are under GSP facility. But she has also mentioned about the necessity of GSP. 4

It is also fact that, the lion share of our export items to US is out of GSP facility. In US this facility is not considered for textile and garment sectors. We were under the expectation that the range of GSP facility should be extended. In that if the GSP facility withdrawn , that will be a blow to this expectation. In addition a negative idea will create about Bangladesh to the other countries of the world, it means effect will be focused on the other way. So we have no scope to pay less attention to this matter though a lesser portion of our export business are considered under GSP facility. From a long ago demand raised in US not to extend GSP facility to Bangladesh. American Federation of Labor and Congress of Industries Organization applied to USTR in 2007 to exclude Bangladesh from the GSP facility lodging a complain about the violation of labor rights in RMG and fishing industries. It has now been placed in front after the recent loss of huge lives due to fire occurrence in Tazrin garment. In fact, the delay in investigation of killing of labor leader Aminul and the violation of labor rights, considering these issues those concerned persons of US always express their negative views regarding GSP facility. In spite of this US is not considering the matters in good eye related to ing of long time for g of TICFA agreement and matters related to Dr Yunus and Grameen Bank. It may be happened that trade sectors has been effected crossing the political arena. In that case considering these factors sending of letter for withdrawal of GSP may be a pressure from US to Bangladesh. But whatever it may be, it is necessary to face and handle the situation so carefully from the concern authority. For maintaining continuation in export trade there is no alternate except the maintaining of labor standard and the improvement of working environment of labors. Though the discussion on withdrawal of GSP was continuing for long days, if the FBCCI, BGMEA, BKMEA and the related Ministry by taking the matter in their cognizance and took all out necessary steps against those organizations, there was no possibility to face this situation. The recent proposals from different countries and buying organizations proposed help and cooperation may be taken into consideration. From this with the improvement of working atmosphere and quality of labor side by side security, confirmation of sufficient arrangement of fire extinguisher and to fulfill other conditions will be easy. If we could able to place the unusual late for fulfill the condition's logical causes those may be considered by the buyers sympathetically. For the interest of our economy to continue the GSP facility all sorts of steps are required to continue. It is also necessary to take necessary steps to fulfill the conditions and strong diplomatic deals to keep free our country's export trade from any sort of threat.

Importance of Bangladesh to the US economy Despite the suspension of GSP, the US has been appreciative of this government’s strong action to root out the terrorist elements from the soil of Bangladesh and as part of the effort, the government has continued to address the problems of money laundering and weak border- controls to ensure that Bangladesh does not become a terrorist safe-haven. Its normalization of relations and connectivity with India is fully ed by the US. Which ever government is elected in Bangladesh, the country is strategically important for the US because of its geographical position. Bangladesh shares borders with India and a rising reformist Myanmar and is close to China. The country stands as a bridge between South Asia and South East Asia. 5

Furthermore Bangladesh has access to the Indian Ocean through the Bay of Bengal which is commercially and strategically important. The US companies are interested in exploring the offshore blocks in the Bay of Bengal. Bangladesh is a good market for American goods and 60% of its economy is connected with global economy. In recent years there has been the convergence in broad economic policies, namely encouragement of private sectors and de-regulation, among major political parties. Bangladesh nationals have settled in America in thousands and as of 2012 there are about 150,000 Bangladeshi-Americans in the US and most of them are skilled and professionals. In Michigan State one Bangladeshi-American was elected in the State Assembly. Bangladesh provides the largest peacekeeping personnel at the UN conflict zones and is well appreciated internationally for their performance. Many strategists suggest that the US is interested to constitute a kind of security (not military) alliance to confront North East Asia’s instability and China’s supremacy in the Asia-Pacific region with India, Australia, Philippines and Japan. Bangladesh and Myanmar could also be included in the loop. Therefore for all these reasons, it is not difficult to see why the US will seek a partnership with Bangladesh now and in future.

Advantage of GSP: GSP form A facilities: Under two stages derogation Bangladesh government is issuing GSP form A to the EEC customers. Therefore, for example, Givensee Group can provide GSP facilities for our valued customers. Bangladesh has an excellent opportunity to boost exports of garments to the USA and EU countries where demand for low cost apparel is increasing. The EU's Generalised System of Preferences (GSP) scheme, which provides garment manufacturers in Bangladesh with duty-free access to the EU market--subject to certain conditions relating to the origin of the materials used in the manufacture of the garment. Today Bangladesh offers a very flexible and feasible production base for its customers in EU, America and Australia. The EU market is quota free for apparels and goods are eligible for the GSP facilities. As an LDC member Bangladesh also obtain special Tariff benefit from Canada (18% import Tax free). Day by day, more and more back ward linked textiles industries are being set up with more variety of yarns for buyers to choose from. Lead times getting shorter as factories offer larger production capacities to alleviate shorter deadlines

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Suspension of GSP: On June 27th, the US suspended Generalized System of Preferences (GSP) for Bangladesh. It will be effective after 60 days. It seems it was a “bolt from the blue” for the Bangladesh government. On June 4, Foreign minister Dr Dipu Moni had told a press briefing: “The review of the GSP facility for Bangladesh in the US market is continuing. The hearing on it has concluded. A Bangladeshi team comprising officials from the foreign ministry, labour and employment ministry, and commerce ministry have discussed the issue with the US authorities. I am hopeful that the USTR will take a positive decision on this.” The US Secretary of State John Kerry was scheduled to visit for six hours in Dhaka while visiting New Delhi from 24th June for three days. The visit to Dhaka was cancelled abruptly without any reasons. There was a premonition in many quarters that that GSP would be suspended for which Kerry’s visit was cancelled.

Figure 1: Bangladesh Exports

Reasons behind US suspension of GSP for Bangladesh It seems obvious that under pressure from AFL-CIO, the US istration found a loophole in the safety and working conditions of workers and the deaths of thousands of workers following the collapse of Rana Plaza and fire at Tazrin garment factory have highlighted the poor safety record and working conditions of workers all over the world. The powerful trade union of the US– AFL-CIO –favours protectionism in trade. Since US products cannot compete with products from abroad, they want to protect the jobs in US factories for of the trade unions by restricting the entry of foreign products in the American 7

market. The stance of AFL-CIO is against the trade policy under WTO. As a result they deny the American consumers the best and cheapest foreign goods as they are generally unconcerned where they come from when they buy products At the hearings at the office of the US Trade Representative concluded in early June, Bangladesh government senior officials stated that the government was taking all appropriate steps including a new labour law to address all the issues relating to workers. Given this back ground, many analysts question whether the poor safety record of workers appears to be the real reason for the suspension of GSP by the US. Many analysts argue there are some strains visible in Bangladesh-US relations, despite the bilateral partnership- talks at the top officials-level. For example, during the tenure of four and half years, Bangladesh Prime Minister Sheikh Hasina could not make a bilateral visit to the US to meet with President Obama, while she was able to pay an official bilateral visit and meet with Russian President Putin this January. They further argue the suspension of GSP is only a manifestation of its displeasure with the Bangladesh government and some of the reasons could be as follows: • The US attaches great importance to good governance, rule of law and makes great efforts against corruption. It seems on these issues, the US is disappointed with the current government in Bangladesh. The cancellation of the World Bank’s loan for Pa Bridge on the allegation of “conspiracy of corruption” is not gone unnoticed by the US. • Democracy is more than just elections. It’s about ensuring that people can have their voices heard peacefully. The mass arrests of top leaders of BNP without bail for some weeks are seen contrary to the spirit of multi-party democracy and did not help the democratic image of the government. • US Secretary of State Hilary Clinton during her visit to Dhaka in May 2012 reportedly expressed concerns on “disappearances” of citizens and on “violent demonstrations which “exacted a heavy toll on poorest people”. She urged “all political actors to work together for good of this country.” Violence on the streets and political instability in the country provide an opportunity for extremist elements exploit the situation and they may raise again their ugly heads, according to the US. • The US wants an inclusive, fair and credible 10th parliamentary election (to be held on any date between 26th October and 24th January next year) and the failure of the government to resolve as yet this issue with the BNP through political process does not augur well for democracy, according to the US. The US may have found streak of authoritarianism of the government in dealing with major opposition parties and with some media. • The government’s treatment with Professor Yunus who received the highest honour from the US President and the US Congress, to put it mildly, has not gone down well with the US istration. • The failure of prosecution of the alleged murderer of labour leader Aminul Islam has infuriated the AFL-CIO and the US Ambassador several times urged for thorough investigation leading to detection and punishment of the culprit. 8

The US has only suspended (not cancelled) the GSP facilities and put a road map to get it restored. US ambassador Dan Mozena reportedly mentioned that the suspension would be withdrawn if the labour environment improved. “Bangladesh has to show that incidents like Rana Plaza and Tazrin Fashions would never happen again,” Mozena told reporters after a function at a city hotel. The suspension appears to be signal to the government to lift up their game consistent with democratic principles and practices.

Figure 2: Exports in 2013

Impact The suspension does not directly affect the country’s multi-billion-dollar clothing exports to the US, because they do not come under GSP. However it affects nearly other 5,000 products which Bangladesh can export to the US without duties, such as golf equipment, plastic bags, bone china, porcelain kitchenware, headgears, spectacles and tents. Bangladesh earned from such exports $35 million in 2012. The suspension is not so much of an adverse effect on Bangladesh total exports which stands at about $25 billion. It is less than 1% of Bangladesh’s exports to the US ($4.9 billion). However it is the image of Bangladesh to international community which is being damaged. Although EU has expressed that it may not follow the US, the EU Trade Commissioner has convened a meeting in Geneva on 8th July to know what steps Bangladesh government and other stakeholders (BGMEA & BKMEA) will take to take care of safety and improved working conditions of workers. It is noted the garment industry employs some 4 million people in Bangladesh, 80 percent of them women, thus empowering young women in the country.

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However other countries such as, Canada and Australia did not take such harsh action against Bangladesh, rather their garment buyers are cooperating with the owners of garment factories in Bangladesh in their efforts in improving safety and working conditions of workers. Analysts say the suspension of GSP does not affect the export of garments to the US market as it is not covered by GSP. The garments can continue to be exported to the US by paying duties of 15.3% and in 2012 it is reported the US earned $749.7 millions on export of $4.9 billion of garment exports from Bangladesh.

Getting back the GSP: According to the US authorities, the major causes behind the cancellation of GSP were mainly the incidents in garment factories; the increasing number of deaths of garment workers; unsafe working conditions; human rights violation; harassment of labour organisers; poor salary etc. Immediately after the decision, the US added some preconditions for the revival of GSP facility. The new and conditions were improvement of labour situation; safety standards for garment factory workers; assurance of security in the workplace; formulation of comprehensive, concrete and coordinated plan to ensure worker’s safety and secure workers’ rights, etc. The authority also added that it would analyse the situation again after six months, following which the GSP suspension would be reviewed. However, the US gave an Action Plan citing the measures for protecting workers’ rights and fulfilling preconditions for getting back the GSP facility. The Action Plan calls on Bangladesh to significantly increase the number of labour, fire and building inspectors and to improve their training. It also recommends imposition of stiffer penalties for the violation of labour law, with particular focus on building safety standards. In response to this attempt, Prime Minister Sheikh Hasina urged the US to withdraw the suspension of GSP. In order to regain GSP facility, the government has already taken some initiatives. For example, Bangladesh has adopted the ‘Labour Law 2013′ in order to protect the rights of the workers. The government has also initiated an attempt for the appointment of as many as 200 workers and the setting up of 7 fire fighting stations to improve the safety of factories. Moreover, the government has also amended the 2006 Labour Act to ease the conditions of trade union in the garment sector, though it has not yet been ed. Despite all these initiatives, the recent unrest in garment industries due to low wage and unsafe working conditions, confrontation between owners and workers may bring about severe challenges for the country in getting back the GSP facility. Bangladesh has not yet been successful in ensuring safe working environment and human rights in garment factories. The wage board fixed an amount of Tk.3,500 for garment workers on November 21, 2013. The workers were not satisfied with this scale, and demanded Tk.8,000 as the minimum wage. The International Labor Organization (ILO) report titled “Bangladesh: Seeking better employment conditions for better socioeconomic outcomes” expressed grave concern about the human rights of the workers. The report said that Bangladeshi garment workers earn less than workers in Vietnam, India or Pakistan. Will Bangladesh be able to fulfill the preconditions for the revival of GSP facility? How can the country restore its preferential access to the world’s largest single market? Though many experts and policy makers have reaffirmed the chances of getting back the facility, it cannot be surely said 10

that it would be easy for Bangladesh to get back the opportunity very soon. In a hearing titled “Bangladesh in Turmoil: A Nation on the Brink” held on November 20, 2013 in Washington D.C., and arranged by Committee on Foreign Affairs and Subcommittee on Asia and the Pacific, John Stifton, Asia Advocacy Director of Human Rights Watch said: “Worker rights and worker safety have been in the spotlight in the aftermath of the Rana Plaza factory collapse and Tazreen factory fire, and small improvements have been observed in the ability of workers to organise.” Cancellation of GSP will damage United States-Bangladesh bilateral trade relations. Bangladesh may also lose foreign investment in the long run. Many experts also warn that if Bangladesh failed to satisfy the US, it may also face losing the same kind of preference from the European Union (EU) as well, which still provides huge to Bangladeshi apparel products. The other possible challenges might be the loss of Bangladesh’s competiveness in the world market, rise of duty in exports, reduction of bilateral trade, and so on. Bangladesh still has the chance to regain the GSP facility as the US has given six months for making visible improvements in the garment sectors and has also added some preconditions for the revival of GSP facility. The government should immediately take necessary attempts for sustaining the country’s economic privileges in the world market. The government should formulate safety codes, stop harassment and arrest of workers, improve working conditions, and ensure non-discriminatory treatment under the World Trade Organisation (WTO) as soon as possible. Unless Bangladesh is able to fulfil the requirements of getting back the GSP, the future of its garment sector along with all other industrial products will suffer in the long run. The latest report of the International Labour Organisation (ILO) warned: “Unless a comprehensive set of labour market and social policies are introduced, Bangladesh will be unable to maintain its economic momentum and improve living standards in a sustainable way.” GSP is a tool for providing economic privilege to ‘most-favoured nation’ in order to promote economic growth around the globe. The world’s poorest countries are getting economic privileges from developed countries from 1976. Under the GSP program, 127 beneficiary developing countries, including 44 least-developed countries get duty-free treatment up to 5,000 types of products during the export to the US. The major objectives of GSP are to advance international economic development by lowering the costs of imported goods and reducing the tariffs of exported goods. The GSP facilities allow duty-free access for some 5,000 products to enter the US market from least developed countries. LDCs are benefited as they can export up to 5,000 types of products free of duty to the US. Bangladesh, among more than 125 countries, receives economic privileges on United States tariffs under a World Trade Organization (WTO) program. Bangladesh gets preferences from the US on tobacco, sports equipment, porcelain china and plastic products. Around 5,000 Bangladeshi products are accorded as duty-free access to the US market.

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A new hope: The United States (US) is likely to reinstate the GSP (generalised system of preferences) facility for Bangladesh, when the US parliament approves a bill renewing GSP facilities for 127 poor countries in September, informed sources said on Sunday. The GSP program for the developing countries expired on July 31, and the US parliament is likely to renew the trade facilities when the Congress resumes session early next month. However, before expiry of the facility, the istration of President Barack Obama suspended it for Bangladesh on June 27, following the collapse of the Rana Plaza at Savar in Dhaka that killed more than 1,130 workers and maimed many on April 24 last. Several in the House of Representatives and the Senate recently introduced a bill to renew the GSP programme that benefits developing and least developed countries including Bangladesh. As the US parliament is likely to renew the GSP for the poor countries, a senior member of the House of Representative and leader of the ruling Democratic Party is scheduled to arrive in Bangladesh tomorrow (Tuesday). House (of representative) Member Sandy Levin has undertaken a three-day visit to see efforts of the government and the relevant stakeholders in the garment sector in improving factory safety, according to a statement of the office of Mr Levin. "The lawmaker and leader of the Democrats will discuss ways and means to improve working conditions in factories in Bangladesh," an official at a leading garment buying house told the FE. Mr Levin is likely to visit a number of garment factories and meet factory workers, employers, business leaders, senior officials of the government and some short-listed non-governmental organisations. A proponent of the decision to suspend the GSP facility for Bangladesh, Mr Levin was in favour of creating pressure on the impoverished country to make better progress in improving working conditions and addressing other safety issues. "His recommendations and to the US istration are likely to play a great role in reinstating the GSP facility," he said. Meanwhile, the Bangladesh government and the stakeholders have started implementing a number of programmes to improve workers' rights and safety standards in factories, according to officials at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). Besides amendments to the labour law by the government, stakeholders are also planning to announce a new wage structure for the workers, said a leader of the BGMEA. If Bangladesh can convince the visitor with its efforts taken anew to improve workers' rights and safety standard at workplaces, the US istration is likely to reinstate the GSP facility, once the parliament renews the GSP programme, they said. Meanwhile, traders and consumers in the US have demanded renewal of the GSP benefits for poor countries, according to The Coalition for GSP, a Washington-based group of US businesses, trade associations, and consumer organisations. President Barack Obama suspended the GSP facilities as the country had failed to protect rights of workers and improve safety standards in factories despite repeated warnings since 2007. The GSP facilities allow duty-free access for some 5,000 products to enter the US market from least developed countries. Mr Levin and other Congressmen from the Democratic Party have urged Bangladesh Prime Minister Sheikh Hasina to in a comprehensive, concrete and coordinated plan to ensure workers' safety and their rights. He also pressed the White House, in a letter to the 12

President, to convene representatives of the European and US retailers, the Bangladeshi garment industry, garment workers, their unions and the government, the International Labour Organisation, and non-governmental organisations to help develop a concrete plan to address the range of workers' issues. However, the GSP suspension was symbolic as it would affect less than 1.0 per cent of the exports from Bangladesh to the US, when the dominant garment exports did not enjoy the facility in the largest economy of the world, traders said. Developing countries and LDCs are benefited as they can export up to 5,000 types of products free of duty to the US. Last year the US imported goods worth $20 billion under GSP facilities, including nearly $35 million from Bangladesh, which included tobacco, sports equipment, porcelain china and plastic products. However, Bangladesh exported garment products worth nearly $5.0 billion to the US during the year.

A road map to restore GSP facility Announcing the suspension of the trade benefits, US president Barack Obama said, “I have determined that it is appropriate to suspend (GSP facility for) Bangladesh because it’s not taking steps to offer internationally-recognised rights to workers in the country.” The decision also puts American companies on notice as they must take meaningful steps to improve conditions for Bangladeshi factory workers, Senate Foreign Relations Committee Chairman Robert Menendez said in a statement. “No one will want to wear clothing that is ‘Made in Bangladesh’ if it is made with the blood of workers. It’s time for the American industrialists to show leadership and work with their European counterparts on a global standard for safety,” he stated. The AFL-CIO labour federation had filed the petition in 2007 with the US Congress to withdraw the facility for Bangladesh. Federation president Richard Trumka said the decision was an important message for countries that receive duty-free access to the US market under the generalized system of preferences (GSP) program. It is reported that the US has provided a “roap” to regain the GSP for which Bangladesh has to the following steps: (a) enforcement of building code, (b) labour law reform, (c) upgrading law for EPZs, (d) union registration and (e) end to harassment and arrest of labour leaders and workers and activists. Bangladesh government described it as “unfortunate” and “harsh” calling it an outcome of a protracted negative campaign. The Foreign Office statement stated “Indeed a section of people, inside both Bangladesh and the USA, had long been campaigning to this effect. Bangladesh was absolutely “respectful of a trading partner’s choice of decisions” but “expresses its deep concern that this harsh measure may bring in fresh obstacles in an otherwise flourishing bilateral trade”.

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Conclusion As if the devastating shock of the deaths caused by the collapse of the Rana Plaza was not enough, the nation witnessed another bad news when on June 27, the United States decided to cancel the Generalized System of Preference (GSP) that it had accorded to Bangladesh. This decision had taken aback many policymakers and businesses. Many were under the impression that this will prove to be disastrous for the country. However, through this write up, I intend to point out that losing GSP is not all gloom and doom for the RMG sector in Bangladesh. First of all, one needs to understand what the GSP is all about from the U.S context. As per the policy of the office of the U.S Trade Representative (USTR), which is an Executive Office of the U.S President, the U.S. Generalized System of Preferences (GSP) is a program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 5,000 products when imported from one of 127 designated beneficiary countries and territories which also includes Bangladesh. The Office further states that U.S jobs are ed because of this policy as U.S. businesses imported $19.9 billion worth of products under the GSP program in 2012, including many inputs used in U.S. manufacturing. According to a 2005 U.S. Chamber of Commerce study, over 80,000 American jobs are associated with moving GSP imports from the docks to farmers, manufacturers, and retail shelves. GSP was instituted on January 1, 1976, by the Trade Act of 1974. Unknown to many, Legal authorization of the GSP program expired on July 31, 2013. The U.S. Congress is considering legislation that would extend the authorization of GSP beyond this date. Bangladesh, as an LDC, is the beneficiary of the GSP Programme. Bangladeshi products such as tobacco, plastic bags and articles, golf equipment, sleeping bags, bone china and porcelain kitchen/ tableware, cereal based prepared foods, hand-loomed woven cotton carpets and other textile floor coverings, spectacles and goggles, headgear other than rubber and plastics, etc. are eligible to enter duty-free under GSP in the US market. Even though the US GSP program covers many products and thus benefits many developing countries, it unfortunately does not help Bangladesh much, as it mostly exports apparel items (RMG) to the USA and apparel, being in the sensitive list, is not covered under GSP program. As a result, exported apparel from Bangladesh, like other exporting countries such as China, face a stiff tariff penalty in USA ranging from 0% to as high as 32%. For example, Bangladesh exports in USA faced tariff penalty of $652 million in 2010. According to the statistics of the Export Promotion Bureau (EPB), the total export of RMG to the U.S.A (as of June 2013) was around U.S$ 407.8 million, or 69% of the total exports of the nearly U.S$ 584.1 million worth of exports to the U.S. Under the circumstances, when the U.S decided to cancel the GSP status of Bangladesh, many people were outraged. However, looking at the above mentioned figures, is it not evident that GSP will not cover the RMG sector, since a huge portion of the nation’s exports to the U.S consists of apparels that are not even part of the GSP system? The speed at which the U.S decided to cancel this status can be termed as a knee jerk reaction to the Rana Plaza tragedy. It may be mentioned that the European Union (EU) nations have still continued to provide GSP to Bangladesh. So the question that we should be asking is: Do we need to put in the extra effort to ensure that we get back the GSP Status from the U.S by the beginning of next year? Considering that GSP is merely symbolic, the answer could be a resounding “Not Really”. On the other hand, one of the and conditions 14

attached to the requirements for once again retaining GSP status includes improving the working conditions of the factories and improving the wages and ensuring the labour rights and well-being of the workers. Surprising as it might be, most RMG factories do not have any trade unions that could act as a representative for the workers. Before anyone brings up the point that Trade Unions are not common in a developed nation like the U.S either, I would like to point out that Trade Unions are not present in the case of certain industries only and yet we have never heard about any discontent among workers in the U.S during this century. In conclusion, I feel that the Government needs to do its best to fulfill some of the conditions to regain GSP mainly to improve the conditions of the RMG workers and not merely aim at once again obtaining a pitiful symbol such as the GSP only as a means to keep the nation’s prestige intact. Similarly, in order to increase revenues from the RMG sector, we need to seriously focus on expanding on our existing markets for RMG from traditional nations like the U.S or the EU to unexplored ones such as China, Africa, South America, etc. If we do get back the GSP facilities by the beginning of next year, then it would still be wonderful news, but realistically, losing this status does not symbolize the end of the world for the RMG sector.

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Reference: a) http://bgmea.com.bd/home/pages/TradeInformation#.Urhd2NIW2gw b) http://www.tradingeconomics.com/bangladesh/exports c) http://www.uns24.com/detailsnews.php?nssl=dd45045f8c68db9f54e70c67048d32e8&nttl= 20072013868 d) http://news.priyo.com/2013/07/21/gsp-facility-us-shows-ways-regain-it-back-81508.html e) http://bdnews24.com/business/2013/06/27/bangladesh-to-lose-gsp-facility f) http://www.thefinancialexpress-bd.com/2013/11/11/3342 g) http://bdnews24.com/business/2013/06/27/bangladesh-loses-gsp-facility-in-us h) http://www.textiletoday.com.bd/weekly-analysis/26 i) http://www.bdchronicle.com/detail/news/32/1337

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