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Bangladesh Still Not Ready for GSP Reinstatement, USTR Says

Thursday, January 22, 2015
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative announced Jan. 16 that it is still not ready to reinstate Bangladesh to eligibility for the Generalized System of Preferences. Bangladesh was suspended from GSP in June 2013 based on its failure to meet statutory eligibility requirements related to worker rights, and the two sides subsequently developed a GSP Action Plan setting forth the measures Bangladesh needs to take to merit reinstatement. The GSP itself expired July 31, 2013, though there is speculation that Congress may renew it sometime this year.

According to USTR, a recent interagency review concluded that there has been some progress in meeting the terms of the Action Plan but that further progress is needed before reinstatement can be considered. On the positive side, more than 2,000 initial safety inspections of factories have been completed in the ready-made garment sector over the last year, most by teams organized by private-sector initiatives led by North American and European brands and retailers. USTR states that 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. In addition, the government is responsible for the inspection of several hundred more factories and has hired additional inspection teams to carry out and sustain the inspection effort.

On the other hand, USTR adds, the review also found that further progress is needed in several key areas. In particular, “urgent progress is needed to fairly and systematically address reports of unfair labor practices and to advance and implement needed legal reforms.” For example, the U.S. is concerned about continuing reports of harassment and violence against union activists seeking to establish new unions or exercise their legal rights. USTR notes that there has also been little progress in advancing the labor law reforms called for in the Action Plan, including changes to ensure that workers are afforded the same rights and protections in export processing zones as in the rest of the country.

USTR notes that in 2012 U.S. imports from Bangladesh under GSP totaled $34.7 million and were led by tobacco, sports equipment, porcelain china and plastic products. However, 96 percent of Bangladesh’s exports to the U.S. are apparel goods that are statutorily excluded from GSP.

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