Bangladesh is, unfortunately, one of the few countries which are suspended by the Obama administration from getting US Generalised System of Preferences (GSP) facility. The suspension came in 2013, just a few months before the facility was supposed to be timed out automatically. Though the GSP facility was restored for most of the countries in August 2015, it did not happen in the case of Bangladesh. In Bangladesh’s neighbourhood, countries like Nepal and Bhutan also got the facility restored. This will help them enter the US market with their exports at lesser duties. Though the US GSP does not cover Bangladesh’s number one export item – the readymade garment (RMG), the facility was applied to other potential exports like ceramic and plastic products. The GSP facility has a psychological value in the sense that it indicates Washington is sincere to see Bangladesh develop through more exports to the US market. When GSP facility was suspended in 2013 following the Rana Plaza tragedy, it came as a shock to the Bangladeshi exporters. Apprehension was there that the European Union might follow the US example, but thanks to the EU policy-makers that they did not do it. The EU market is more important to Bangladesh as the GSP there covers RMG products. In fact, it was the EU which has made Bangladeshi apparels known throughout the world. Bangladesh has now diversified its export market. The new markets include Canada, Japan, China and Turkey. But still the main destinations of RMG products from Bangladesh are the EU and the US markets. While RMG products from Bangladesh enter the EU with zero tariff, exporters have to pay 15 per cent-18 per cent duty on the FOB (Free On Board) value in the US market. Bangladesh is one of a few least developed countries which is paying much higher tax for its exports to the US. Under special as well as bilateral accords, many advanced economies, including members of the EU, were paying much less taxes while entering the US market. On the other hand, the US offered zero-tariff and quota-free access to the African countries on their exports to the US under a separate agreement known as the African Growth and Opportunity Act (AGOA). For some Latin American countries, the US offer special facilities in case of exports to the US market under bilateral agreements. The Rana Plaza disaster had hastened the suspension of the GSP facility. That tragedy shook the conscience of Bangladeshis. The government too was taken aback by the Rana Plaza collapse and it realised clearly that something has to be done to prevent repetition of such tragedies in future. The buyers of the RMG products took a strong stand against such accidents and told the Bangladesh exporters in clear terms that any such incidents that take lives of the working people would compel them to abandon sourcing of the products from Bangladesh. Bangladesh offered instant cooperation to foreign buyers in the field of compliances. Both the EU and the US buyers deputed their own verification agencies known as Accord and Alliance respectively to see what owners of the garment factories were doing to upgrade work standards and make factories accident-free and what rights the garment workers were enjoying. Though Bangladesh did not earlier allow trade union activities among RMG workers, in the aftermath of Rana Plaza tragedy, it is considering granting such rights to them. Factories’ safety standards, as warranted by Accord and Alliance, are also being put in place very quickly. A meaningful cooperation between buyers and producers of RMG products as regards labour standards and factory safety is there now. How much wages and other benefits five million RMG workers will get depend on what the price the exporters can fetch from the foreign markets. Buyers, of course, will source apparels from cheapest markets for their imports, but they should also see that a little better price offer for the RMG products could enable the producers to offer higher wages to the workers who will help produce quality products. In the coming days, Bangladesh will have to face more challenges with export of its RMG products. The competitors are making better terms for themselves by having alliances in various forms with the importing countries. The real threat will come when the US and 11 other countries sign a free trade agreement known as the TPP. The TPP members include countries like Vietnam which has already emerged on the world scene as a serious competitor to Bangladesh. As Bangladesh is gradually fulfilling the conditions laid down by the verifying agencies, the US should consider relaxing its strict terms paving the way for partial restoration of the suspended GSP facility, pending duty- and quota-free access to the US market. The GSP facility can even be made conditional for a specific period.
