Bangladesh Trade Status Reviewed by U.S. Before Collapse

Months before a garment-factory collapse in Bangladesh killed more than 500 people, the U.S. government said it was considering revoking the nation’s preferred trade status over treatment of workers.

The U.S. Trade Representative’s office said in a Jan. 8 notice in the Federal Register that “the lack of progress by the government of Bangladesh in addressing worker rights issues in the country warrants consideration of possible withdrawal, suspension or limitation Bangladesh’s trade benefits.”

The office said an inter-agency panel had concluded that the plight of workers may justify ending Bangledesh’s participation in a program known as the Generalized System of Preferences. That status lowers or eliminates tariffs on some products imported into the U.S. The USTR is scheduled to decide in June whether to pursue the matter further.

“The administration has been concerned about the worker rights situation in Bangladesh for some time, and we have conveyed those concerns on numerous occasions to the highest levels of the Government of Bangladesh,” Andrea Mead, a spokeswoman for the USTR, said in a written response to questions yesterday. The building collapse and other incidents “have only intensified our concerns,” she wrote.

The death toll for Bangladesh’s worst industrial disaster climbed to 539 as the army continued to clear out debris at the building that collapsed April 24, according to the control room supervising the salvage effort.

Labor-rights advocates say the collapse of the Rana Plaza garment building in Bangladesh underscores the need to improve worker conditions in the country. The 27-nation European Union is considering trade sanctions. Mead didn’t say if the U.S. would seek similar sanctions due to the disaster.

Congressional Reaction

“Something very dramatic needs to happen” to improve worker conditions in Bangladesh, Representative Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee, which oversees trade policy, said yesterday in a phone interview. Revoking GSP status alone wouldn’t be the right policy because it doesn’t apply to garment makers, he said.

Retailers including Wal-Mart Stores Inc. (WMT) and J.C. Penney Co. (JCP) and labor activists have been considering an agreement to improve factory safety in Bangladesh for at least two years. Walt Disney Co. (DIS), the world’s largest entertainment company, which has partners in various countries that make clothing and merchandise, decided in March to pull out of the country.

Governments in the U.S., EU and Bangladesh should gather garment makers and workers, unions and retailers to create a plan improve labor conditions in the Asian nation, Levin and Representative George Miller of California, the top Democrat on the House education and workforce committee, said in a May 1 letter to President Barack Obama.

‘Full Speed’

“You can’t remedy this situation piecemeal,” according to Levin, who said his office has been in touch with the Obama administration to set up meetings beginning next week. “We’re going full speed ahead on this.”

Labor advocates say the garment-building collapse may help push the U.S. to act on their six-year-old effort to end some of Bangladesh’s trade preferences, due to concerns about worker rights.

The AFL-CIO believes the U.S. is “seriously considering taking action” to end or limit preferred tariff rates “as a result of all of the government of Bangladesh’s failures in the area of internationally recognized worker rights, including but not limited to” the factory collapse, according to Celeste Drake, an AFL-CIO policy specialist for trade and international economics.

Action Needed

The U.S. “should take some action ASAP instead of leaving the petition languishing under review,” Drake said in an e-mail. “Since it has been under review for so long and failed to make sufficient progress” for worker rights, leniency on the tariff rates is “unlikely to achieve good things for workers,” she said.

The U.S. is examining Bangladesh’s trade preference “as part of an ongoing country practice review,” according to the federal register notice in January. Specifically, the U.S. is concerned with the workers’ rights of association and collective bargaining in Bangladesh. Altering trade preferences under the program is up to the president.

The benefits the U.S. considering curbing for the Asian nation don’t apply to apparel and are therefore “the wrong tool” in dealing with worker safety in Bangladesh, Julia Hughes, president of the United States Association of Importers of Textiles and Apparel, said in a phone interview. “We agree with the goals” of improving working conditions.

“We want to look at a government-to-government summit first, and then let’s bring in the private sector,” Hughes said.

To contact the reporter on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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