WASHINGTON, June 27 (Reuters) - President Barack Obama cut
off long-time U.S. trade benefits for Bangladesh on Thursday in
a mostly symbolic response to conditions in the country's
garment industry that have cost more than 1,200 lives in the
The U.S. move does not directly affect Bangladesh's
multi-billion-dollar clothing exports, since garments are not
eligible for U.S. duty cuts. But it could prompt the European
Union into similar action, which would have a bigger impact as
Bangladesh's clothing and textiles exports to the EU are
"I have determined that it is appropriate to suspend
Bangladesh ... because it is not taking steps to afford
internationally recognized worker rights to workers in the
country," Obama said in a statement.
The government in Bangladesh said it did not expect the move
to have an immediate impact on business but feared it would hurt
U.S. investment in the country over time.
"We are desperately trying to upgrade the situation of our
garment factories and we expect assistance, not punitive
action," said H.T.Imam, government adviser to Prime Minister
The factories came under scrutiny after the collapse of the
Rana Plaza garment factory building in April that killed 1,132
people and the Tazreen factory fire in November that killed 112.
"This was not a decision taken lightly," U.S. Trade
Representative Michael Froman told reporters. "Our goal, of
course, is not only to see Bangladesh restore its eligibility
for (the trade) benefits, but to see Bangladeshi workers in
safe, appropriate work situations."
Richard Trumka, president of the AFL-CIO labor federation,
said the decision sent an important message to countries that
receive duty-free access to the U.S. market under the
Generalized System of Preferences (GSP) program.
"Countries that tolerate dangerous - and even deadly -
working conditions and deny basic workers' rights, especially
the right to freedom of association, will risk losing
preferential access to the U.S. market," Trumka said.
It also puts American companies on notice they must take
meaningful steps to improve conditions for Bangladesh's factory
workers, Senate Foreign Relations Committee Chairman Robert
Menendez, a New Jersey Democrat, said in a statement.
"No one will want to wear clothing that is 'Made in
Bangladesh' if it is made on the blood of workers. It's time for
American industry to show leadership and work with their
European counterparts on a global standard for safety."
U.S. HEAVILY TAXES CLOTHING FROM BANGLADESH
Suspending Bangladesh from the GSP program will increase
U.S. duties on an array of products the country exports to the
United States, such as tobacco, sporting equipment, porcelain
china, plastic products and a small amount of textile products.
"I wonder why the U.S. government does not ask U.S. buyers
to offer us a better price instead of deciding to squeeze us
further," said K.M.Iqbal Hossain, general secretary of the
Bangladesh Plastic Goods Manufacturers and Exporters
"This will only make things worse for workers even in other
sectors." Hossain said taxes for the plastics industry would
rise by 10 percent. Bangladesh exports plastic accessories such
as garment clips and hangers among others.
The GSP program was created in 1976 to help economic
development in the world's poorest countries and to reduce
import costs for U.S. companies.
In 2012, Bangladesh was spared about $2 million in U.S.
duties on about $35 million worth of goods under the GSP
program, but it paid about $732 million in U.S. duties on $4.9
billion of clothing exports not covered by the program, said Ed
Gresser, a trade analyst with the GlobalWorks Foundation.
An EU decision to suspend trade benefits would have far more
impact. EU officials raised the possibility of suspension in
early May in the hope of prodding Bangladesh into action.
The EU imported roughly 9.2 billion euros ($12.13 billion)
of goods from Bangladesh last year, according to data from the
EU's executive branch, the European Commission.
Clothing and textile products ranging from towels and
bedding accounted for almost 93 percent of those goods.
EU and Bangladeshi officials will meet in Geneva in July for
talks aimed at improving safety conditions in Bangladesh and
preserving the country's trade benefits.
Bangladesh Garment Manufacturers and Exporters Association
President Mohammad Atiqul Islam said it was struggling to
improve working conditions in the country and hoped for a better
judgment from the European Union.
PETITION FILED IN 2007
The United States' own review dates back to 2007, when the
AFL-CIO, the main U.S. labor group, first filed a petition
asking that Bangladesh's trade benefits be revoked.
Despite the relatively small volume of trade affected by the
U.S. decision, Froman said Bangladeshi officials put great value
on remaining in the program.
"We will be staying very much in direct and continuous
contact with the government of Bangladesh as they take
additional actions on workers rights and workers safety," Froman
said. "We'll review their status at the appropriate time."
European retailers have responded to the two tragedies by
signing an agreement to promote worker safety in Bangladesh, but
many U.S. retailers have balked at accord, saying it gives
unions too much control over ensuring workplace safety.
They have been working instead with former Maine U.S.
senators George Mitchell, a Democrat, and Olympia Snowe, a
Republican, on an alternative plan to improve fire and safety
The effort is being coordinated by the Bipartisan Policy
Center, a Washington think tank.
"At this point only a few final details remain to be worked
out and agreed upon," BPC President Jason Grummet said earlier
this week in an email. "We remain on track to complete the
process by early July."