Good economic relation with the USA is important for Bangladesh. The USA is the most important trading partner of the country. The USA is not only the highest importer of Bangladeshi products, it also stands out as more important than many other donor countries when it comes to aid and ODA (overseas development assistance). Besides, the USA is the top technology and expertise support provider for Bangladesh in the energy sector. Moreover, the readymade garment (RMG) sector, which is the lifeline for Bangladesh's economy, is mostly dependent on the USA market.
But since the USA withdrew the GSP (generalised system of preferences) facilities for Bangladesh, the bilateral trade volume has fallen. The data from the Bangladesh Bank shows that during the last January-March period the total export to the USA was recorded at Tk 845.67 billion (84,567 crore). But in the second quarter the figure declined to Tk 786.18 billion. Besides, according to the Bangladesh Economic Review (2014), during the last three years there was no FDI (foreign direct investment) inflow from the USA.
From Bangladesh's perspective, such a contraction of trade with the biggest trading partner may impede economic growth of the country. Now, the question is: why is the trading opportunity declining? Under the principle of Most Favoured Nation (MFN) of the USA, Bangladesh as a least developed country had been enjoying the GSP facility since 1976. GSP is a preferential arrangement that allows duty-free entry of selected commodities from some selected countries to the markets of some rich nations. Under the scheme, Bangladesh was allowed to export about 5,000 products to the US market. Although RMG was not included in the GSP list, other top export items had been there. The items included shrimp, tobacco, ceramic, bicycle, golf equipment, plastic bags and many foods made from cereal.
So, needless to say, suspension of GSP would impact badly on the next top export items after RMG as the country exports to a very limited number of destinations. As claimed by the USA, the lack of proper safety compliances in the RMG sector was behind suspension of the GSP. So, though RMG was not on the GSP list, the uncertainty relating to growth of the sector would remain. The US government and their buying houses might not be guided by same principles. The US buying houses may ignore ethical issues for the sake of profit maximisation by importing products at low prices. But the US government is not immune to pressure from different human rights organisations, international civil societies or even from countrymen following deadly accidents like the Rana Plaza collapse and Tazrin Fashions fire. As a precondition for restoration of the GSP facilities the USA set 16 conditions, mostly regarding workers' safety. Meeting the conditions is very important. If the conditions are not met properly, the US government may impose restriction on their buying houses' import of apparels from Bangladesh leading to a further slowdown in the country's exports.
Exploitation of labour in the RMG sector was criticised by the global communities including the USA. In this backdrop, if the European Union takes similar steps on the GSP facility, it would be more destructive for the RMG sector, as Bangladesh's RMG is included in the EU GSP programme.
So, since the workers' safety and other social compliances have turned out to be most sensitive to both national and international communities, the government should put pressure on the factory owners to enhance their safety arrangements as per the international labour right standard. If there is corruption in any regulatory body providing clearance certificates, the government should investigate it immediately and take necessary remedial steps.
The writer is a lecturer at the Department of Economics, Jagannath University, Dhaka.
chowdhurym31@yahoo.com