Obama to Suspend Trade Privileges With Bangladesh
The New York Times | 28 June 2013
Munir Uz Zaman/Agence France-Presse — Getty Images
A woman mourning a relative,
believed to have died in the collapse of the Rana Plaza garment factory
building in Savar, near Dhaka, Bangladesh. More than 1,100 people died.
The Obama administration on Thursday announced plans to suspend trade
privileges for Bangladesh over concerns about safety problems and labor
rights violations in the country’s garment industry.
Wong Maye-E/Associated PressNew denim jeans in the rubble from the Rana factory.
The administration has come under intense pressure to suspend the
privileges in recent months — first after a factory fire there killed
112 workers last November and then after an eight-story factory building
collapsed in April, killing 1,129 workers.
Trade experts said the administration’s decision would be a substantial
blow to Bangladesh’s reputation and was likely to ratchet up pressure on
its government to move more quickly to improve factory safety and end
what Washington sees as widespread violations of workers’ rights.
Administration officials said they have offered Bangladesh a road map
for steps it needed to take to have trade privileges restored.
In a letter to Congress on Thursday, President Obama said he was
suspending the privileges, effective in 60 days, because Bangladesh was
“not taking steps to afford internationally recognized worker rights to
workers in that country.”
Labor unions and Democrats on Capitol Hill have been pressing the Obama administration to take the step, saying the United States needed to go beyond stern words and take strong action to convey to the Bangladeshi government that far more needed to be done to ensure factory safety.
“The U.S. decision sends a very strong signal to the government of
Bangladesh that they have to do things differently, that there’s a
consequence to the way they’ve been operating,” said Michael H. Posner, a
former assistant secretary of state of human and labor rights in the
Obama administration.
The suspension will revoke the breaks on tariffs that the United States
gives Bangladesh under the Generalized System of Preferences, a World
Trade Organization program that seeks to promote economic growth.
While Bangladesh fought vigorously to prevent the suspension, worried
about the signal it sends to its citizens and to global investors, some
trade experts said the suspension would be largely symbolic because it
will affect less than 1 percent of America’s $4.9 billion in annual
imports from Bangladesh.
The tariff preferences being curtailed cover a variety of products,
including tobacco and plastic bags, but do not apply to the country’s
garment industry, which does not have American duty-free status and
represents the great bulk of that country’s trade with the United
States.
Bangladesh, one of 125 countries that receive American trade
preferences, is allowed to export nearly 5,000 products duty-free to the
United States, which buys about 25 percent of that country’s $18
billion in annual apparel exports.
In a telephone interview, Michael Froman, the United States trade
representative, said that Washington’s experience with “trade
preferences over the years is that the importance of General System of
Preferences eligibility is greater than the numbers themselves,
particularly in cases where the issue of G.S.P. eligibility has gotten a
fair amount of attention in Bangladesh and elsewhere.”
He added, “We’ve been in dialogue with the government of Bangladesh
about improving worker rights and worker safety and in the absence of
sufficient action, we felt it was important to take this action.”
The Obama administration’s move may have some influence on the European
Union, which is also weighing whether to suspend Bangladesh’s trade
preferences. Action by the Europeans could have much greater impact
because Europe’s duty-free privileges include Bangladeshi apparel and
Europe buys 60 percent of that country’s garment exports.
The damage Bangladesh’s other industries will face from the suspension
is expected to pressure the country’s garment industry to make many of
the changes Washington wants. Last December, the United States sent
Bangladesh a list of areas that needed improvement. The list included
ending government harassment of union organizers and giving more rights
to workers in the country’s special export manufacturing zones.
The federal government has not been unified on the suspensions, however.
The Labor Department has favored them, arguing that Bangladesh and its
garment industry have been slow to improve factory safety and end
violations of workers’ rights to form labor unions. At the same time,
some State Department officials opposed the move, saying it would damage
diplomatic relations with a country that has faced Islamist threats and
would undermine the economy of an already poor country.
Khurshed Rinku/Associated PressRows of charred sewing machines in the Tazreen factory, which burned last November.
The Bangladesh Foreign Ministry issued a statement criticizing
Washington’s move, saying that “this harsh measure may bring” new
obstacles to “an otherwise flourishing bilateral” trade relationship. It
said it hoped that the United States would soon restore the country’s
trade preferences and it urged Western buyers to “continue their
business with their long trusted partners” in Bangladesh.
The administration’s move on Thursday was in response to an official
complaint filed by the A.F.L.-C.I.O. in 2007. The labor federation was
upset about numerous deadly factory fires, a 2005 factory collapse that
killed 64 workers as well as extensive efforts by Bangladeshi garment
manufacturers to suppress labor unions.
The Obama administration took that complaint with new seriousness after
the fire last November at the Tazreen factory, which made garments for
American companies like Wal-Mart, and the collapse of the Rana Plaza
building two months ago. The collapse was the most deadly accident in
the history of the world’s apparel industry.
“We welcome the fact that our government has finally decided to take
action after we’ve seen all these egregious labor rights violations,”
said Cathy Feingold, director of the labor federation’s international
department. “We hope this will lead to real change in Bangladesh.”
The garment industry is a major driver of Bangladesh’s economy, with
more than 5,000 factories that employ four million workers. Bangladesh
is the world’s second-largest apparel exporter after China. Its minimum
wage of $37 a month, the lowest in the world, has been a huge lure for
manufacturers and helped the country’s garment industry expand — with
many hastily and shoddily built factories as a result.
The A.F.L.-C.I.O. and the Obama administration have expressed concern
about the treatment of labor activists in Bangladesh. In April 2012,
Aminul Islam, a prominent labor organizer, was found dead, his body
showing signs of torture. Bangladeshi news media reported that
government security forces might have had a hand in his death.
While Mr. Posner, the former State Department official, said the
Bangladeshi government had not done enough to meet American demands for
workplace safety, he added, “They probably don’t have the financial
resources alone to do everything that’s needed.”
Mr. Posner, now a professor at the Stern School of Business at New York
University, said Washington’s move added pressure on American and
European retailers to further improve safety. “It increases public
attention to this issue and makes clear that this is a crisis
situation.”
Wal-Mart, Gap and other major American retailers are working with the Bipartisan Policy Center to
develop a plan over the next few weeks to improve factory safety in the
Bangladeshi garment industry. But industry and labor officials say the
American retailers are unlikely to agree to a legally enforceable plan
like the one that has been embraced by more than 40 European retailers.
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