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US Withdraws GSP Benefits From Bangladesh

by Mike Godfrey, Tax-News.com, Washington

03 July 2013


United States Trade Representative (USTR) Michael Froman has announced the outcome of the 2012 Annual Review under the Generalized System of Preferences (GSP) program, which has included a decision by President Barack Obama to suspend the eligibility of Bangladesh for its tariff benefits.

Under the GSP program, up to 5,000 types of products from 127 beneficiary developing countries, including 44 least-developed countries, are eligible for duty-free treatment when exported to the US. In 2012, the total value of imports that entered the United States duty-free under GSP was USD19.9bn.

"GSP is a tool for advancing international economic development while also helping US businesses, workers, and consumers by lowering the costs of imported goods, including those used as inputs for US manufacturing," Froman said.

Following the Annual Review, as one of his determinations, President Obama has decided, drawing on the recommendation of the USTR, to suspend the GSP benefits of Bangladesh based on that country's failure to meet the statutory GSP country eligibility criterion related to internationally recognized worker rights.

"Our GSP statute requires certain basic standards for worker rights and worker safety as a condition of eligibility," Froman noted. “Over the past few years, the US Government has worked closely with the government of Bangladesh to encourage the reforms needed to meet those basic standards. … (However,) the recent tragedies that needlessly took the lives of over 1,200 Bangladeshi garment factory workers have served to highlight some of the serious shortcomings in worker rights and workplace safety standards."

He confirmed that, "while taking this action today, the Administration is also initiating new discussions with the government of Bangladesh regarding steps to improve the worker rights environment in Bangladesh so that GSP benefits can be restored." But he gave no indication if and when that restoration could take place.

The suspension of Bangladesh, which becomes effective 60 days after the publication of the proclamation in the Federal Register, follows a multi-year, interagency US Government review of Bangladesh's compliance with statutory GSP eligibility criteria, which had actually begun in 2007.

It has been said, however, that, while it lasts, Bangladesh's GSP suspension will largely be symbolic, as its garment exports do not qualify for its benefits and already face US tariffs. In 2012, the value of imports that entered the US from Bangladesh duty-free under GSP was only USD34.7m, less than 1 percent of all exports from Bangladesh to the US. Top GSP imports from Bangladesh were tobacco, sports equipment, porcelain china and plastic products.

In addition to its action against Bangladesh, the USTR has also accepted for review a country practice petition on Ecuador related to the recognition and enforcement of arbitral awards. Several other country practice petitions accepted in previous years remain under review: Indonesia, Russia, Ukraine and Uzbekistan, regarding the protection of intellectual property rights, and Fiji, Georgia, Iraq, Niger, the Philippines and Uzbekistan regarding worker rights.

TAGS: Russia | environment | compliance | tax | business | Niger | intellectual property | tariffs | Ecuador | Fiji | Iraq | Philippines | enforcement | manufacturing | Bangladesh | Georgia | Indonesia | United States | import duty | standards | trade | Ukraine | Uzbekistan

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