The Obama administration announced Thursday that it will suspend Bangladesh’s preferential trade status following the devastating collapse of a clothing factory there that killed more than 1,100 workers.
The decision was hailed by union representatives and members of Congress as sending an important message about worker safety to the Bangladeshi government. But the actual impact of the move was likely to be negligible on that country’s $19 billion export-driven apparel industry, which is characterized by low wages and abysmal working conditions for its 4 million workers, 80 percent of whom are women.
Of the nearly $5 billion in exports to the United States, only $35 million are exempt from duties under the U.S. Generalized System of Preferences. Apparel and shoes, which are Bangladesh’s primary exports to the U.S., do not receive duty-free benefits, said Ed Gresser, a trade analyst at GlobalWorks, a Washington research foundation.
“In terms of the actual amount of trade it affects, it’s actually quite small. And for better or worse, it’s not in the industry that has aroused the concern,” Gresser said. He noted that the $2 million that Bangladeshi exporters had saved under the preferences would be hardly noticeable in the $4.4 billion in apparel exports to the United States.
Still, American officials said they hoped the symbolism would prod Bangladesh’s government to take steps to improve working conditions and wages.
“Bangladesh is an important trading partner, but we cannot and will not look the other way while workers are subjected to unsafe conditions and environments endangering their well-being,” Senate Foreign Relations Committee Chairman Robert Menendez, D-N.J., said in a statement Thursday. “Bangladesh’s labor laws must be dramatically improved, and suspending (trade) benefits will hopefully help kick-start these overdue reforms.”
Richard Trumka, president of the AFL-CIO, said he hoped the suspension would make it easier for Bangladeshi workers to unionize.
“The decision to suspend trade benefits sends an important message to our trading partner. . . . Countries that tolerate dangerous – and even deadly – working conditions and deny basic workers’ rights, especially the right to freedom of association, will risk losing preferential access to the U.S. market,” he said in a statement.
U.S. Trade Representative Michael Froman, who recommended the suspension, said that the administration will begin talks with the Bangladeshi government soon to address the lack of workers’ rights and workplace standards.
The trade preference suspension was prompted by the collapse April 24 of the Rana Plaza office compound in Savar, near the Bangladeshi capital of Dhaka, which in addition to a garment factory also housed offices and other businesses.
Building inspectors spotted cracks in the building and ordered it closed, and most of the building’s businesses evacuated. But the factory owners told workers to report the next day in spite of the warnings, according to Bangladeshi news reports. When the workers returned the next day, the building collapsed, killing more than 1,100 people in the worst garment-industry disaster in history. Another 2,500 people were injured.
The Senate Foreign Relations Committee pressed retail and trade representatives earlier this month for broader change from the private sector and encouraged them to establish their own standards for trade with Bangladesh.
The U.S. is one of Bangladesh’s largest partners, falling second only to the E.U. and giving Bangladesh a vested interest in protecting the trade relationship. Leading European retailers have already agreed on standards for continuing trade with Bangladesh, and E.U. officials have met with Bangladeshi leaders in efforts to improve working conditions.
Menendez warned of possible repercussions if American retailers fail to do the same.
“Either get your act together and establish standards, or find yourself with standards you may not care for,” he told retail industry representatives at a June 6 hearing. “I hope that’s the message you take back to the industry today.”
Calls to legal representatives for the retail industry were not returned Thursday.