U.S. Suspends Trade Privileges with Bangladesh: Strategies and Spillovers

The U.S. government’s reported move to suspend trade privileges with Bangladesh must come as a blow to the ruling Awami League government, even if the meat of the move functions mostly as an unwelcome, untoward public relations disaster and a boon to its BNP opposition.

The Obama administration has responded to pressure from activists and sponsors in the Democratic Party and its trade union base and has finally moved on its earlier investigation into the Bangladesh government’s poor record on workers rights, particularly in the garment manufacturing industry. The adminstration has suspended the trade privilege which Bangladesh, along with a reported 125 other countries, enjoys and that supports the import of 5000 categories of Bangladeshi products without import duties. However, the suspension of trade privileges does not affect the garment industry since garment products do not enjoy duty free import status vis-a-vis the United States.

The suspension is therefore a rather symbolic move that nevertheless carries with it the mark of the United States’ disapproval of the Awami League government’s conduct in a pulsingly important sphere of its economy  a mark that could carry over to the the European Union which actually does offer duty free status to Bangladeshi garments. And since European markets consume 60% of the garment exports out of Bangladesh, Europe’s move in tandem  with the U.S. trade suspension could seriously harm the garment manufacturing trade.  No wonder, then, the government of Bangladesh is concerned about the reputational costs of the Obama’s administration’s move.

According to Steven Greenhouse’s piece in the New York Times:  “Trade experts say they expect the suspension, a serious blow to Bangladesh’s image, would pressure its government to move more aggressively to improve safety and protect worker rights in its garment industry. The industry is a major economic driver, with more than 5,000 factories that employ 4 million workers.”

And that’s the rub: Bangladesh’s garment industry is one of its most powerful economic engines. Any move that stalls out that engine is sure to concern the Awami League, especially with a parliamentary election scheduled to be fought out by early next year.  The government has been rightly blamed for its failure to monitor labor conditions in the garment industry; certainly, there has not been a dearth of reasons for being deemed blameworthy on those terms. The 2012 Tazreen Fashions factory fire that killed at least 117 workers initially mobilized international concern and support for the plight of garment workers in Bangladesh and, more broadly, labor conditions there. That mobilization peaked after the devastating building collapse at Rana Plaza just outside Dhaka proper that killed at least 1127 people.

No doubt, then, the Awami League government is interested in addressing international concerns for human rights and workers rights. This, again, for purely political, electoral reasons as well as, surely, for other normative concerns. The payoff for all this politicking from the United States and elsewhere will turn on strictly laying out, enumerating, the content of the government’s concrete moves to address those concerns. The government had best get going on that soon.

Photocredit: Wikipedia Commons