Will United States withdraw Bangladesh GSP facility?

Mamun Rashid Count down the days until March 28, 2013. The jury panel of the United States Trade Representative (USTR) on that day will hear Bangladesh defending its points of view about not withdrawing or limiting the Generalised System of Preferences (GSP) facility on some of its export items to the USA. Looking at the size and value of its exports under GSP, it is not a big deal for Bangladesh. But analysts are telling that the end-impact of the decision by the jury could be quite large and may also be devastating for Bangladesh. Bangladesh exported goods worth US$196 million in 1985 to the USA. Such exports rose to $2.41 billion in 2000 and furthermore to $4.92 billion in 2012, with most of such exported merchandise, consisting of ready made garments (RMG). In January 2013, Bangladesh exports to the USA reached $495 million against its imports of $31 million from the latter. The USA has emerged as the single-most important destination for Bangladesh exports. And the potential for further increase is also quite high. Bangladesh has been competing with India, Pakistan and Vietnam to both retain and increase its exports to the United States, especially the apparel goods. The journey was never smooth for Bangladesh. There had been constant allegations against its 'how-side' of producing apparels, productivity and labour standard and related rights' issues. Having very few friends for Bangladesh, the office of the USTR has always been quite serious to ensure appropriate factory conditions, labour standards and safety of an individual worker in the production units in Bangladesh. If you ask any large US buyer of Bangladesh apparel items, it would say, apart from loud media reports, that such buyers have, of late, been receiving thousands of communications by mail, even from the individual consumers, asking them to be extra-cautious while procuring goods from Bangladesh, a country not otherwise considered very favourite for its poor governance and compliance standards. The Tazreen Fashion episode, alongwith the murder of labour union leader Aminul Islam, has particularly aggravated the situation. The US government had received a petition from AFL-CIO (American Federation of Labour and Congress of Industrial Organisations) in 2007 for cancellation of the GSP facilities to Bangladesh for its failing to maintain appropriate labour standards and workers' safety. We have heard very senior US officials, telling us that GSP is "a programme with very specific statutory requirements," one of which concerns labour standards. The cycles of the GSP process that the US goes through, have, again, been in the news in recent months, since a lot of issues concerning the stakeholders, especially in the US have remained 'unresolved'. If no significant progress is reported and also not duly recognised by the authorities concerned in between, it could adversely impact the decision about continuation of the facility in the USA. Unlike European Union's GSP-spread that covers 'everything but arms', the GSP in the USA, as of now, covers only 0.54 per cent of Bangladesh exports to that country, which, in value terms, amounted to $26 million in 2011, covering tobacco products, sports equipment, china kitchenware and plastic articles. Bangladesh exports to the USA in 2011 were $4.88 billion. Then, why should we be so concerned? Yes, there are reasons to be not only concerned, but also to get panicky over it, as our business leaders have noted, "although the volume of the Bangladesh products exported to the US market under the GSP scheme is very insignificant, the country's image would gravely be tarnished if the benefit is canceled." Retention of the GSP benefit is a prestige issue for Bangladesh, as it refers to labour standards, working conditions and safety- and security-related matters concerning the workers. All these have cascading effects on our exports to other destinations, too. This is all the more important, when a bill to allow Bangladesh goods 'duty-free' access to the United States is pending for long, before the US Congress. In January this year, the USTR sought comments from the stakeholders on the possible withdrawal, suspension or limitation of GSP benefits to Bangladesh, based on the allegations that the latter did not make much progress in addressing workers' rights and their working conditions. The government of Bangladesh has already put up a 'position paper', highlighting the progress that it has so far made, while demonstrating its serious commitment to pursuing the 'laundry list' that was identified. A Bangladesh team will leave Dhaka tomorrow (March 26) for the USA to attend the USTR hearing on March 28 and defend the country's causes. We will, of course, want Bangladesh causes to be duly heard, attended to, and recognised well, in a broader perspective. Along with our industry leaders, we do not want the cancellation of the US's GSP to be cancelled. Nor our labour leaders or even the workers want this to happen. This low-income country, with its 31 per cent of the population still living under the poverty line notwithstanding the pledges by all its successive governments about creating an adequate number of income-generating jobs in this 'labour surplus' one, can not bear the 'scar' of all possible adverse fall-outs from such a withdrawal. And more importantly, the United states of America, with its increasing commitment to seeing a 'better Bangladesh' is least expected to take such a step; it should rather should come forward to 'hand-hold' Bangladesh in order to enable it to come clear out of the hovering cloud. We should also engage other development partners to help us in improving the global image of our apparel industry. I am sure, if we can play it cool and in togetherness, we can not only convince the concerned circles about the imperative for continuing the GSP facility but also consider 'duty-free access' for Bangladesh goods. Bangladesh have come 'up the curve' over the years. With respectable work ethics, diversity and its hardworking entrepreneurs and workers, this country has every possibility about keeping its flag flying high. (The writer is a banker and economic analyst. E-mail: mrashid1961@gmail.com)