‘Threats to revoke GSP unjust’

Finance Minister Abul Maal Abdul Muhith has said ‘threats’ to cancel Bangladesh’s preferential trading status are ‘unjust’.

Both the European Union (EU) and the US have threatened to reconsider the facility following the death of over 1,100 people, mostly ready-made garment workers (RMG), in a building collapse near the capital Dhaka last month.

Bangladesh has emerged as the second largest exporter of RMG products after China.

Low labour cost has made it an attractive option for foreign buyers. The $20bn industry has been criticised for labour abuses and poor working conditions.

Muhith on Saturday argued the sector had flourished over the past 30 years and was ‘improving’ day by day.

He said the Generalised System of Preference (GSP) or duty free access should be maintained.

GSP, providing import tariff breaks, is designed to help developing countries grow through trade. Losing the facility could cost Bangladesh millions of dollars in taxes.

Media reports suggest moves to reconsider the GSP facility were prompted by a fire at the Tazreen Fashions Limited last November killing over 110 people and gained momentum after the collapse of Rana Plaza in Savar.

The Finance Minister felt there was much talk about the GSP facility since two disasters occurred within a short span of time.

“It (the RMG sector) has developed as an integrated industry. Standards are being maintained,” he told a meeting of the International Business Forum of Bangladesh.

He said the government was doing everything possible to bolster safety in the sector and ensure labour rights.

“A threat to cancel the GSP is unjust,” the minister said.

EU has stepped up diplomatic heat on Bangladesh to improve working conditions. Bangladesh currently enjoys the most generous level of GSP in the region, which imports around 60 percent of its products.

This was the second such warning from the European Union this year.

Muhith said Bangladesh products had to enter the US market by paying a 24 percent tax whereas France paid only five percent.

“This discrimination is utterly illogical, unjust and unfair,” he said.

Bangladesh exported goods worth around $5bn to the US in the 2011-12 fiscal, which accounts for up to 21 percent of the total export. RMG products do not enjoy the facility.

After the November fire, several US lawmakers had reportedly pressed the Obama administration for reconsidering GSP. Bangladesh is awaiting verdict on a petition to revoke the facility.

A hearing on the petition was held at the Office of the US Trade Representative in Washington on Mar 28.

This is the third time such a petition to revoke the duty-free market access has been filed since Bangladesh secured the facility in 2007.

After the country’s worst-ever industrial disaster, US envoy Dan Mozena had said Bangladesh may run into deep waters.

The EU imported roughly 9.2 billion euros of goods from Bangladesh last year, according to data from the EU's executive body, headquartered in Brussels.

Textiles and textile products accounted for almost 93 percent of those goods.