GSP and Bangladesh

What is GSP? 

The Generalized System of Preferences (GSP) is a U.S. trade preference program that provides opportunities for many of the world’s poorest countries to use trade to grow their economies and climb out of poverty.   GSP is the largest and oldest U.S. trade preference program. Established by the Trade Act of 1974, GSP promotes economic development by eliminating duties on up to 5,000 types of products when imported from one of 122 designated beneficiary countries and territories. 

The USA has left out Bangladesh from GSP list

The GSP, is a preferential tariff system which provides for a formal system of exemption from the more general rules of the World Trade Organization (WTO). 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.
GSP exempts WTO member countries from MFN for the purpose of lowering tariffs for the least developed countries, without also lowering tariffs for rich countries.

GSP and Bangladesh: 

The USA government has recently left out Bangladesh from the GSP list. Bangladesh was suspended to enjoy the GSP privileges since 2013 after consecutive catastrophe in two garments Rana Plaza and Tazreeen Fashions Ltd. The US officials said, Bangladesh was failed to protect the workers safety and rights. 

The GSP privileges was suspended for Bangladesh from 2013

Recent review of USP says, there is more work to do, building on the collaboration between the government of Bangladesh, private sector stakeholders, and the International Labour Organisation, to address the concerns about factory safety in the apparel sector.

In 2012, the total value of US imports from Bangladesh under GSP was $34.7 million; the top GSP imports from Bangladesh included tobacco, sports equipment, porcelain china, and plastic products.

The US companies are losing $2 million a day since the suspension of the scheme for all countries, according to American Apparel and Footwear Association.

The January USTR review also said there has been little progress in advancing the labour law reforms, including changes to ensure that workers are afforded the same rights and protections in export processing zones as in the rest of the country.

The USA officials says, Bangladesh has to improve on worker safety and rights

Under the general supervision of the Bangladesh government, more than 2,000 initial safety inspections of factories were completed in the garment sector over the last year, most by teams organised by private sector initiatives, it said.

These inspections resulted in the closure of at least 31 factories, the partial closure of 17 additional factories, and the identification of needed remedial measures in hundreds more, the USTR said.

In fiscal 2013-14, Bangladesh exported goods worth more than $5.58 billion to the US, with 95 percent of them being garment products, which were subjected to 15.61 percent duty.

Reaction in Bangladesh:

The Centre for Policy Dialogue yesterday criticized the US for its decision to leave Bangladesh out of the list of countries granted trade benefits recently.“It was bad as Bangladesh did not regain the GSP,” said Debapriya Bhattacharya, distinguished fellow of the think-tank.“Compared to other countries, Bangladesh has not been in such a bad shape that it was wise to do the unjust for the country.”

He was speaking at a discussion on the apparels sector at Brac Inn in the capital. The discussion was organised by CPD in partnership with Friedrich-Ebert-Stiftung's (FES) country office.

Though the USA has denied GSP for Bangladesh over the worker rights issue but some media and personality point that it would be a political consequence that will put pressure over the Sheikh Hasina-led Government. Bangladesh’ commerce minister Tofail Ahmed sees politics in the refusal to get GSP to Bangladesh. He told it to country’s national media. The US ambassador Mrs. Bernicat says "This decision is not about politics, it is about workplace safety and labour rights and issues related to industries.”

Though Bangladesh couldn’t make reasonable improvement to regain GSP its officials blames politics for the failure to regain it. It is a common culture here. But the most affected victim of this refusal will be the garments industry workers of Bangladesh. They would lose their job and suffer a lot economic problems. But if Bangladesh can improve that issues to regain GSP it will be greater achievement for the garments sector of Bangladesh.