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Acknowledgement

We would like to give thanks to those people who helped us to prepare this report. At first we

would like to express deep gratitude to our honorable course instructor Md. Shak Forid, Asst.

Professor, School of Business of Ahsanullah University of Science and Technology, for his

sincere guideline and valuable remarks, thoughtful comments and essential suggestions. Heinspired us and gave us encouragement to complete this report.


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Executive SummaryThe generalized system of preferences (GSP) is one of the key administrative arrangements that

govern US's concessions in foreign trade. The program was designed in 1976 with a view to

promoting economic growth mainly in the developing world. Since its launch, 128 beneficiary

countries and territories have received GSP facilities for exporting up to 5,000 products in the

US market. Theoretically, Bangladesh could also be among the beneficiaries. Ironically it is not.

In 2011, Bangladesh's exports to the USA under the GSP scheme were worth $26.33 million

compared with India's $3.7 billion and Brazil's $2 billion. Analyses of exports under GSP would

give an identical picture for these countries in the current and previous years as well.

Notably, Bangladesh's most important export item in the US market, readymade garments

(RMG), is not covered under the GSP scheme. The few goods that Bangladesh could so far

export to the USA under the GSP coverage include tobacco, plastic bags and articles, gold

equipment, bone china, porcelain kitchen/table ware, and cereal-based prepared foods, etc.

Sleeping bags were excluded from GSP on January 1, 2012. Citing import sensitivity, the US

authorities in its 2010 review withdrew the GSP benefit from sleeping bags, meaning an end to

Bangladesh's efforts to claim a tiny share, which is otherwise a Chinese monopoly in the USA.

Bangladesh's export figures in sleeping bags rose from $0.17 million in 2008 to $5.82 million in

2011 -- not such a big deal compared with total US import value in this item ($87.5 million in

2011) or Bangladesh's market prospect in the most optimistic scenario. However, what was a

matter of utmost concern was the fashion in which a poor trading nation was singled out from

among many far superior performers to exert tariff barriers and nip all hopes in the bud. It is

still impossible for Bangladesh to fathom what might have been the reason leading to any such

decisions.


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IntroductionThe tremendous success of readymade garment exports from Bangladesh over the last two

decades has surpassed the most optimistic expectations. Today the apparel export sector is a

multi-billion-dollar manufacturing and export industry in the country. The overall impact of the

readymade garment exports is certainly one of the most significant social and economic

developments in contemporary Bangladesh. With over one and a half million women workers

employed in semi-skilled and skilled jobs producing clothing for exports, the development of

the apparel export industry has had far-reaching implications for the society and economy of

Bangladesh. Bangladesh cares very deeply about retaining GSP benefit because of the following

reasons: a) Bangladesh's extremely narrow and fragile export basket, b) link between trade

performance and human development and social stability, and most importantly, c) seeking

recognition as an early stage industrializing nation.

Bangladesh's export sector is extremely narrow and fragile in term of both size of market anddiversity of export items. The USA is Bangladesh's single largest export destination that

accounts for more than a quarter of Bangladesh's total exports. More than 95 percent of the

export earnings from the USA (worth more than $4.5 billion) come from just one single export

item, which is garment. Given that excessive dependence on one single particular item,

Bangladesh remains extremely serious about adding new items in its export basket. Here lies

the significance of the US-GSP.


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Background of the Study

BBA programme report is an attempt to provide business students an orientation to a real life

business situation in which we can observe and evaluate the use and applicability of thetheoretical concepts. As per norm, this report is the requirement of the fulfillment of the MBA

program. This report GSP and Garment sector of Bangladesh is the outcome of 02 weeks

work on Garments Sector. During this period, my job has related to this department. Our

Honorable Supervisor, MD. Shak Forid, Assistant Professor, School of Business authorized this

report to me to acquire the practical knowledge.

Objectives of the Report

Each & every study should have objectives. The objectives of my project have divided into two

parts.

Broad objective

To know the overall activities ofGSP and Garment sector of Bangladesh.Specific objective

The key objectives of this report are as follows:

To know the duties and responsibilities due to GSP and Garment sector of Bangladesh. To know the overall internal and external environment of GSP and Garment sector of

Bangladesh.

Identify the major opportunity and threats ofGSP and Garment sector of Bangladesh.


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MethodologyThis report has been prepared on the basis of experience gathered during the period of our

course time. For preparing the report, we have also got the information from annual report and

website of the Rising Apparels Ltd. We have presented my experience and finding by using

different chart and tables. We have also written down my report on the basis of primary andsecondary data.

Primary source

From different employees in garments we get information. To collect this information we

communicate with this companys different department employees such as Md. Azizur Rahman

and Md. Ashraful Alam.

Secondary source

To prepare this report we used different news papers, books which are secondary information.Especially I use various websites as well as Bangladesh garments industry.

Limitations of the Report

Since our study is based on both primary and secondary data, there is a possibility of getting

fake information. If the surveyed personnel provide us with any fabricated information about

their opinion of their organization, then the report findings may be erroneous. Above all, this

study is weak in some points. The notable ones are as under:

The survey was conducted in a very short time so we were not able to collectmore information.

This survey made on crisis situation of Bangladesh, so it was difficult to collect moresamples.

Only the big and the reputed Garments Company consider here as sample. Another limitation of this study is the persons private information were not disclosing

some, data and information for obvious reasons, which could be very much useful.

Lack of experience in this field. Lack of proper authority to conduct the interview program


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GSP (Generalized System of Preferences)

The Generalized System of Preferences (known as GSP for short) is a scheme whereby a wide

range of industrial and agricultural products originating in certain developing countries aregiven preferential access to the markets of the European Union.

Preferential treatment is given in the form of reduced or zero rates of customs duties.

The GSP scheme is specifically designed to benefit certain developing countries and integrate

them into the world economy.

The Generalized System of Preferences (GSP) is a U.S. trade program designed to promote

economic growth in the developing world by providing preferential duty-free entry for up to

4,800 products from 129 designated beneficiary countries and territories. GSP was instituted onJanuary 1, 1976, by the Trade Act of 1974.

Congressional authorization of the GSP program expired on December 31, 2010. President

Obama signed legislation to reauthorize the GSP program through July 31, 2013. GSP trade

benefits went into effect 15 days after the President signed the bill (November 5, 2011) and will

apply retroactively from January 1, 2011.

GSP Review in perspective of Bangladesh

The generalized system of preferences (GSP) is one of the key administrative arrangements that

govern US's concessions in foreign trade. The program was designed in 1976 with a view to

promoting economic growth mainly in the developing world. Since its launch, 128 beneficiary

countries and territories have received GSP facilities for exporting up to 5,000 products in the

US market. Theoretically, Bangladesh could also be among the beneficiaries. Ironically it is not.

In 2011, Bangladesh's exports to the USA under the GSP scheme were worth $26.33 million

compared with India's $3.7 billion and Brazil's $2 billion. Analyses of exports under GSP would

give an identical picture for these countries in the current and previous years as well.

Notably, Bangladesh's most important export item in the US market, readymade garments

(RMG), is not covered under the GSP scheme. The few goods that Bangladesh could so far

export to the USA under the GSP coverage include tobacco, plastic bags and articles, gold

equipment, bone china, porcelain kitchen/table ware, and cereal-based prepared foods, etc.


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Sleeping bags were excluded from GSP on January 1, 2012. Citing import sensitivity, the US

authorities in its 2010 review withdrew the GSP benefit from sleeping bags, meaning an end to

Bangladesh's efforts to claim a tiny share, which is otherwise a Chinese monopoly in the USA.

Bangladesh's export figures in sleeping bags rose from $0.17 million in 2008 to $5.82 million in

2011 -- not such a big deal compared with total US import value in this item ($87.5 million in2011) or Bangladesh's market prospect in the most optimistic scenario. However, what was a

matter of utmost concern was the fashion in which a poor trading nation was singled out from

among many far superior performers to exert tariff barriers and nip all hopes in the bud. It is

still impossible for Bangladesh to fathom what might have been the reason leading to any such

decisions.

GSP benefits and urgency at Bangladesh

Bangladesh cares very deeply about retaining GSP benefit because of the following reasons: a)

Bangladesh's extremely narrow and fragile export basket, b) link between trade performance

and human development and social stability, and most importantly, c) seeking recognition as an

early stage industrializing nation.

Bangladesh's export sector is extremely narrow and fragile in term of both size of market and

diversity of export items. The USA is Bangladesh's single largest export destination that

accounts for more than a quarter of Bangladesh's total exports. More than 95 percent of the

export earnings from the USA (worth more than $4.5 billion) come from just one single export

item, which is garment. Given that excessive dependence on one single particular item,

Bangladesh remains extremely serious about adding new items in its export basket. Here lies

the significance of the US-GSP.

Afl-Cio petition: Our version also needs attention

A historic development since filing of the GSP petition is the separation of Bangladesh's

judiciary from the executive organ of the government. This development has significantly

strengthened the workers' rights enforcement mechanism. While the government is

responsible to ensure compliance with labor standards required to retain GSP benefit,

Bangladesh seeks understanding of the US authorities that judiciary's independence has also

limited the government's power to go for any drastic overhaul. The following brief account of


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governmental and industry level initiatives would speak of the utmost seriousness Bangladesh

pays to advance labour welfare.

Governmental Efforts

Legislation: The law called EPZ Workers' Associations and Industrial Relations Act-2004 has

been changed to EPZ Workers' Welfare Association and Industrial Relations Act-2010 with a

view to putting more stress on welfare related provisions. As per the directives of the law until

December 2011, 151 enterprises have formed Workers' Welfare Associations (WWA).

Bangladesh is in the process of implementing ILO Better Work programme which stands to

improve labour compliance to the satisfaction of the global community.

Protecting workers' rights at Export Processing zones: In 2011 the government empowered

existing labour courts and appellate tribunals (constituted under the 2007 Labour Act) to

function as EPZ labour tribunal and appellate tribunal. We hope, at a later time we would be

able to provide a summary of how many disputes could be resolved through these tribunals to

the satisfaction of concerned parties.

Minimum wage: In 2010 the minimum wages and other benefits of the EPZ workers were

enhanced up to 93 percent from the previously agreed wages. At the initiative of Prime

Minister Sheikh Hasina, last occasion the workers' wage rate was enhanced five months earlier

than previously declared time. It needs to be noted that the minimum wage is applicable onlyto the new recruits when they are still in their training period. Only a small segment of the

workers receive the minimum wage salary.

GSP Withdrawal to Have Signaling Impact

The GSP (Generalized System of Preferences) issue is still a much-debated one and everybody

understands how important GSP status is for Bangladesh. The European Union (EU) alone is

gobbling up 60 percent of our garment exports. Its a program designed to promote economic

growth in the developing world by providing preferential duty-free entry for up to 5,000

products when imported from one of 127 designated beneficiary countries and territories.


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Under the GSP scheme, a host of Bangladeshi products except RMG enjoy duty-free entry to

the US market at present. Since GSP is a political issue, many things are happening these days,

especially on retaining that facility in the US market. It is clear that such facility will be there in

place only if the Bangladesh government and the owners can ensure the rights of the workers

and improve safety in the workplaces.

The US government is yet to decide on the GSP facility for Bangladesh on grounds that the

workers in the sector are not being allowed to join trade union and that many other labour

rights were not ensured. The US envoy in Dhaka Dan Mozena has mentioned several times that

the GSP benefit will only prevail if the government and the owners meet the conditions.

Bangladesh that has the potential to surpass even China regarding the export of RMG and

cottage industry products was moving forward well in meeting those conditions. But after Rana

Plaza tragedy that claimed over a thousand lives, the process got complicated a bit.

There is apprehension among the industry leaders that the US government will withdraw the

GSP benefit from Bangladesh. As the prospect of retaining GSP facility in the US market is

apparently becoming bleak, I talked to a prominent economist to get an idea of whats

happening over the issue. The economists, executive director of the Centre for Policy Dialogue

(CPD) Prof Mustafizur Rahman, thinks the withdrawal of the GSP benefit will have a signaling

impact on the US buyers and their investment in Bangladesh.

Actually, Im still hopeful of retaining the GSP facility. But, if it turns negative, itll certainly

have a signaling impact, and the US buyers and investors will think of it (afresh), he said.

I wanted to know more. He replied saying, Its a political decision and theyll consider many

things before taking the final decision. I dont think the US has taken the final decision yet.

Prof Rahman said the European Union and Canada have already issued warning messages but

he does not think they will take any serious decision that will hurt Bangladeshs interests.

Therere many steps taken by the government. The labor law has already been amended and

approved by the Cabinet. I think the US authorities will consider it.

Bangladeshs apparel exports to the EU made a leap since January 2011 when it allowed GSP for

Bangladeshi garments made from imported fabrics. Previously, Bangladesh used to enjoy the

GSP benefit only for those garments made from local fabrics.

There is a 46 percent rise in apparel exports between a year without and with GSP, indicating

the importance of this status in the countrys apparel industry.

Responding to another question, Prof Rahman said there is no direct link between signing the

Trade and Investment Cooperation Framework Agreement (Ticfa) with the US and retaining the

GSP facility.


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But, if Ticfa is signed, a positive environment will prevail. Signing Ticfa doesnt mean GSP will

be retained. Actually, after Rana Plaza tragedy, the process got complicated a bit, he said.

I tried to reach the toip leaders of the RMG sector. President of Bangladesh Exporters

Association (BEA) Abdus Salam Murshedy responded to my query. Its a government-to-government process. Were doing our best to satisfy them. Its true were under pressure after

the recent accident.

Murshedy, also a former BGMEA president, said they need to show the US authorities

practically that these are the changes theyve brought in. I hope itll remain as it (GSP) was.

Former first vice president of the BGMEA, M Nasiruddin Chowdhury said they do not think that

things will turn negative. What I understand is that theyll take time to take the final decision.

Theyll monitor the entire situation closely.

Commerce Minister GM Quader has recently said after the Rana Plaza collapse it has become

difficult to expect a positive result from the United States Trade Representative (USTR) hearing

on the GSP facility.

US Ambassador Dan W Mozena, he said, has passed on a grim feedback from the United States

Trade Representative.

Following the Tazreen fire last year that killed 112 workers, American Federation of Labour and

Congress of Industrial Organisation, the largest trade union in the US, filed a petition for

discontinuation of GSP for Bangladesh.

GSP only if working standards are met: Dan W Mozena (US Ambassador)

Bangladesh can convince United States to continue GSP for its garment exports by improving

working conditions and safety standards in its factories, US envoy to Dhaka Dan W Mozena said

on Saturday.

The disaster at Savar happened because labour groups were not there to defend worker

interests, Mozena told a public hearing on industrial safety at the parliament members club on

Saturday.The US ambassador replied saying, The collapse of Rana Plaza and the fire at Tazreen Fashions

took place right when Bangladesh is being considered for the GSP. These questions were raised

in 2007 as well. These incidents give rise to safety questions. Bangladesh has to show that it has

taken initiatives to better the work conditions.


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Bangladeshs effort to get preferential access to the US market suffered a huge set back after

the collapse of Rana Plaza that killed over 1,100 people, mostly garment workers.

Mozena had told reporters that the mishap would have an adverse impact on the Bangladeshs

chance of getting GSP.

Bangladesh exports a large number of products to the United States but readymade garments

its main export item does not enjoy the preferential trading status.

According to data by Export Development Bureau, Bangladesh has exported goods worth over

US $24 billion in the 2011-12 fiscal year. Of this 21 percent ($5 billion) was exported to the US.

Bangladesh has emerged as the second largest exporter of readymade garments products,

thanks to the duty-free access offered by Western nations.

In 2011, goods worth US $26.3 million were exported to the US. The GSP covers the export of

tobacco products, sport equipments, kitchen utensils and plastic goods to the US.

There has to be a coordinated effort by government-buyer-owner to provide factories with

safety certificates. This process has to be independent and transparent. There has to be a

regulation that rules out rights to export without a certificate.

The US ambassador urged the government to meet international standards while passing the

Labor Law to secure rights of its workers.

The new Labor Law will maintain the rights of workers, he added.

The parliament standing committee for the Ministry of Labor and Employment arranged the

public hearing. Representatives of garment workers, owner and buyers took part in the hearing.

Bangladesh government to defend its GSP status

The Government of Bangladesh will be defending its Generalized System of Preferences (GSP)

status and is preparing a proper response to be presented before the US Congress.

Talking to media, Commerce Secretary Mahbub Hossain said the Government is preparing a

response and it will send a dossier of all the positive activities done in the past four years.

Bangladesh has managed to retain its GSP status on two earlier occasions since it secured the

facility in 2007.


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Withdrawal of GSP Facilities Threat for RMG Export Earnings

Readymade garment (RMG) industry, one of the important sectors of the economy of

Bangladesh, is now under a great threat. The United States is considering the working

atmosphere for labor and their rights and may cancel the GSP (Generalized System ofPreference). Under the provisions GSP facilities Bangladeshis garments enjoyed a special tax-

free entry to the US market. If those are cancelled then our flourishing economy will be

affected as a lions share of our export earnings comes from the RMG sector. At present we

have nearly five thousands garments factories with several hundred thousand people earning

their bread from them. Twenty million peoples are directly or indirectly depended on garment

In October last year, the American Federation of Labor-Congress of Industrial Organizations

(AFL-CIO) made an appeal for revoking the GSP status of Bangladesh.

AFL-CIO claimed that labour rights are not protected in Bangladesh and the countrys fire-

fighting system is not sufficient in apparel sector and at the Export Processing Zones.

Following the appeal made by AFL-FIO, the United States Trade Representative (USTR) served a

notice and asked the Government of Bangladesh to defend itself against the allegation by Jan

31, 2013.

The US Government has sought the response from Bangladesh Government showing

improvement in working condition and workers facilities, Mr. Faruque Hassan, vice president

of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told fibre2fashion.

The US allows duty-free access to 97 percent of Bangladeshi products under GSP, but actuallyonly one percent of our goods go under GSP to the US, as readymade garments (RMG), our

main export item, is not covered under GSP, he explains.

So, garment exports would not be affected even if the GSP facility is withdrawn by the US. But,

we hope the US will continue to give GSP status to Bangladeshi products as we are improving

working conditions and facilities given to workers, he avers.

Talking about the steps being taken by clothing manufacturers, he says, One problem the RMG

manufacturers are facing is that of space constraint. But, they are now shifting to a new proper

industrial building.

Moreover, the garment makers are also redesigning their working pattern, he informs.


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industries. So there is a possibility of bad impact on the socio-economic structure of the country

if the GSP facilities are cancelled.

In the meantime trade representative of US Ron Clerk has informed the Government of

Bangladesh through a letter about the beginning of working process of cancellation of GSP

facilities. Such a possibility has been apprehended since long. The RMG industries in our

country have been flourishing vigorously for the last two decades. But in most of the cases,

attention has not been paid to the working atmosphere and facilities for labours in the

factories. Buyers from the US and the countries of European Union always expect that

garments workers can work in a healthy atmosphere with adequate safety arrangements.

But it is unfortunate that the owners of the RMG industries did not give attention to ensuring

the above facilities for the workers. Due to these reasons dissatisfaction of labourers continues

in RMG industries. Fire breaks out in the garment industries and lead to loss of lives and

properties almost every year. The death of workers due to fire at Tazreen Fashion of Ashuliajust two months ago got wide media coverage throughout the world. Following this the US and

many other stakeholders from different parts of the world raised question about the working

atmosphere and labour rights situation in the countrys garment industries.

In the mean time the Bangladesh ambassador in the US has discussed the matter with the

concerned quarters in a bid to retain GSP facilities for Bangladesh. From the Bangladesh side

assurance has been given regarding the fair investigation about the killing of labour leader

Aminul Islam. It is hoped that the GSP facility for Bangladesh would not be withdrawn.

Savar crash (Rana Plaza) ignites EU actions Threat

The European Union has threatened to suspend Bangladeshs preferential trading status unless

it improved safety standards in its readymade garment factories.

"This is about firing a shot across the bows of Bangladesh to get them to engage on the issue,"

an EU official told Reuters News agency.

The warning comes as a multi-storied building, housing several readymade garments factories,collapsed at Savar on Apr 24, leaving over 400 confirmed dead and scores of other missing.

Bangladesh has emerged as the second largest exporter of readymade garments trailing China,

thanks to the duty-free access offered by Western nations.

Losing the facility in the European markets under generalized system of preferences (GSP) could

cost Bangladesh hundreds of millions of dollars in duties, Reuters says in a Brussels-datelined.


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Bangladesh currently enjoys the most generous level of GSP in the region which imports around

60 percent of its products. GSP is designed to help developing countries grow through trade.

If it were outside the GSP, it would face normal import duties, which are 12 percent for many

clothing items ranging from men's jackets to women's blouses.

EU officials hope the threat of action would be enough to make the country change its laws to

keep hold of its biggest market.

This is the second such warnings from the European Union this year. The 27-nation bloc in a

statement urged Bangladesh to act immediately to ensure factories across the country

comply with international labor standards.

The EU imported roughly 9.2 billion euros of goods from Bangladesh last year, according to data

from the EU's executive body, the European Commission, headquartered in Brussels.

After a garment factory fire killed six persons, the bloc called on Bangladesh in January this year

to ensure its factories complied with the International Labour Organization (ILO) standards.In the past the bloc used access to trade preferences as leverage in dealing with countries.

Fire at another factory last November killing over 110 people had prompted US lawmakers to

call for suspending its GSP programme with Bangladesh. After every major industrial accident,

authorities promise to ramp up security measures and improve work conditions at factories.

Industrially Global Union, a Swiss-based body representing 50 million workers worldwide, has

served a May 15 deadline for the Western retailers for a commitment for fire and building

safety plan for Bangladesh. It said funds will be made available for inspection training and

upgrades of dangerous facilities in the county and called on the retailers to pay the suppliers

more. However, any action from the EU would likely take more than a year since it would have

to launch an investigation into concerns over labor conditions in the country, after consulting

with European governments. Only after the investigation would the Commission decides

whether or not to temporarily withdraw Bangladesh from the GSP scheme. Bangladesh is also

awaiting verdict on the petition to revoke the GSP that it enjoys for the US market access and

the worst industrial accident in its history is not helping the cause of retaining the facility.

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

on Apr 28. The representatives of the American Federation of Labor-Congress of Industrial

Organizations (AFL-CIO) presented the case for revoking the facilities.

The USTR officials did not say anything specific after the hearing, but the commerce secretary

said they were kind of assured by the measures taken by Bangladesh.

The Rana Plaza collapse was the third major accident in past six months raising questions about

worker safety and labour conditions in Bangladesh. Clothes made in five factories inside the

illegally constructed building were produced for retailers in Europe and Canada.

In the year to June 2012, Bangladesh's garment exports to the EU rose to $11.37 billion from

$10.52 billion a year earlier, according to the Commerce Ministry. Germany is the main EU


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market at $3.4 billion, followed by the UK at $2.13 billion, Spain at $1.71 billion and France at

$1.27 billion. Outside the EU, the United States is the biggest market, which accounts for 23

percent, or $4.53 billion. Around four million people, mostly women, work in Bangladeshs

garment industry. Most of the workers toil hard for as little as $38 per month.

US set to suspend Bangladeshs GSP
http://www.thedailystar.net/beta2/news/us-set-to-suspend-bangladeshs-gsp/http://www.thedailystar.net/beta2/news/us-set-to-suspend-bangladeshs-gsp/http://www.thedailystar.net/beta2/wp-content/uploads/2013/06/fr0118.jpghttp://www.thedailystar.net/beta2/news/us-set-to-suspend-bangladeshs-gsp/


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After a six-year review of safety standards and labour conditions, the US was set to suspend

duty waiver for Bangladesh yesterday, in a move that will hurt the countrys exports to

The decision waiting to be announced will slap tariffs back on some of Ban gladeshs exports to

US markets under the programme known as the Generalized System of Preferences. However,

the scheme does not cover Bangladeshs main export: garment. The suspension underlines the

lack of progress by the government in improving factory conditions. The office of the United

States Trade Representative (USTR) declined to comment. Administration and Congressional

officials said the official announcement would come later on Thursday, The New York Times

reported.

Government blames insiders for GSP suspension

The government has accused a section of people both in Bangladesh and the United States for

the unfortunate GSP facility suspension in getting duty-free access to the US market.

The Government of Bangladesh has come to know about t he

unfortunate development of GSP suspension in the USA. Indeed a

section of people, both within Bangladesh and the USA, had long

been campaigning for this, the Ministry of Foreign Affairs said on

Friday.

It hoped that Washington would soon reintroduce the facility.

The US suspended long-time preferential trade benefits for

Bangladesh in a mostly symbolic response to hazardous working

conditions in the garment industry that have cost more than 1,200

lives in the past year.

The US sanction does not directly affect Bangladesh's main export,

multi-billion-dollar clothing to the United States, since garment is

not eligible for duty cuts under the Generalized System ofPreferences, or GSP programmed.

But the decision raised concerns as other countries like European

Union and Canada, where readymade garments enjoy this While Bangladesh is absolutely

respectful of a trading partners choice of decisions, it expresses its deep concern that this
http://www.thedailystar.net/beta2/wp-content/uploads/2013/06/fr0125.jpg


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harsh measure may bring in fresh obstacles in an otherwise flourishing bilateral trade, the

ministry said in a media release.

The ministry said Bangladesh expected the US administration to soon restore the GSP status, a

benefit a least developed country is supposed to receive in the developed countries as per the

provisions of the World Trade Organization.

United States cuts Bangladesh GSP trade privileges over concerns for worker safety and rights

The United States has withdrawn key trade privileges from Bangladesh, citing dangerous

conditions for workers in the wake of a factory building collapse that killed more than 1,100

people. An order by president Barack Obama removed Bangladesh's duty-free trade privileges

under the Generalised System of Preferences program (GSP) , increasing pressure on Dhaka to

boost workplace safety after a series of disasters in the country's huge garment industry. "Ihave determined... that it is appropriate to suspend Bangladesh's designation as a GSP

beneficiary developing country because it has not taken or is not taking steps to afford

internationally recognised worker rights to workers in the country," Mr Obama said in the

order. The move means importers of many Bangladesh products will have to pay duties on

them to bring them into the US, effectively using financial pressure to force producers to

improve conditions. The recent tragedies "have served to highlight some of the serious

shortcomings in worker rights and workplace safety standards in Bangladesh," said US trade

representative Michael Froman in a statement.

"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.

"Despite our close engagement and our clear, repeated expressions of concern, the US

government has not seen sufficient progress towards those reforms."

GSP cut to push Bangladesh improve

The US says suspension of preferential trading status for Bangladesh is an opportunity for it to

improve working conditions and workplace safety in its factories.Its Press Office Director says the US will work with Bangladesh on the steps needed to restore

the GSP facility. The United States believes this moment represents an opportunity for

Bangladesh to take action to improve labor condition and safety standards, Patrick Ventrell

said at a press conference in Washington on Friday (local time). Bangladesh has been enjoying

Generalized System of Preferences (GSP) Bangladesh in the US market though not for its ready-

made Workers platforms in Bangladesh have criticized the move saying it will not help their


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economy which is picking up. Bangladesh government has described the decision unfortunate

and hoped Washington would consider reviving the facility soon.

Analysts say the move will be a major blow to Bangladesh if it influences the European Union

into taking a similar decision, because the EU takes in the bulk of Bangladesh's readymade

garments which is the country's major export. The 27-nation bloc has been repeatedly

threatening to revoke GSP facility if working conditions were not improved in the factories. TheEU buys more than $12 billion-Bangladeshi garments annually, roughly three-fifths of the

countrys production. The US decision comes against the backdrop of last years fire at Tazreen

Fashions Limited wherein over 110 workers were killed and the April collapse of Rana Plaza

near Dhaka leaving over 1,100 dead, mostly ready-made garments workers.

The US decision, however, will have little direct impact on Bangladeshs multi-billion dollar

ready-made garment export as the item was not included under the GSP. Bangladesh is the

second largest exporter of ready-made garment products after China.

The US is the single largest importer of Bangladeshi goods. According to the Export Promotion

Bureau (EPB), the total exports during 2011-12 fiscal were $24 billion. Exports to the US

accounted for around $5.1 billion, about 21 percent of the countrys total export. Out of this,

share of apparel export was worth $4.53 billion.

According to the US Trade Representative, Bangladeshi businessmen earned $34.7 million by

exporting tobacco, sports equipment, porcelain china and plastic products to the US and duties

waived amounted $2 million. We want to see the Bangladeshi economy succeed, Ventrell

said asserting the GSP cancellation was but an opportunity for the South Asian nation.


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Recommendations

After analysis the data & I get some major problems. Now here I want to give some

recommendations to enrich the Export facility & to get more export earning which is related to

the GSP. The recommendations are given:

Minimum wage should need to provide for employing Workers. Proper Working condition, occupational safety need to improve. Health-care initiatives for the RGM workers. The government in partnership with the BGMEA needs for plans to make suitable

housing facilities for the garment workers.

Skill enhancement training facility need to arise to develop the workers skills & abilities. Workers festival needs to be arranging for their satisfaction. Provide day care & refreshment facility to the workers. Make the long term plan to reduce the child-labor.


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Conclusion

The Generalized System of Preferences (GSP) was established to promote economic growth and

development of low-income countries by fostering exports to industrialized countries. Thegeneralized system of preferences (GSP) is one of the largest facilities for the Garments industry

of Bangladesh. Bangladesh gets deeply GSP benefit because of the some important factors

which is related to development of the industry sector. The USA is Bangladesh's single largest

export destination that accounts for more than a quarter of Bangladesh's total exports. More

than 95 percent of the export earnings from the USA (worth more than $4.5 billion) come from

just one single export item, which is garment. For the reason of the GSP facility the garments

sectors are developed day by day & for this reasons the export earnings of Bangladesh have

been increased day by day. Garments sector is the number one sector of export earnings in

Bangladesh. But the sad news is that the USA government stopped temporary GSP facilities forthe Bangladesh due to the reason of the, lack of labor or workers safety & security & lack of the

under development of the workers. This is the major threat for the Bangladeshi garments

industry because it will be reduce our export earnings & image of our country. So, the

government & the BGMEA & other related authority needs to take major steps immediately to

get back the GSP facility & make garments sector profitable.


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References

http://www.dailyprimenews.com http://archive.thedailystar.net (The Daily Star Newspaper) www.google.com http://risebd.com http://www.newstoday.com.bd

bdnews24.com

http://www.fibre2fashion.com http://www.steinandpartners.com http://www.revenue.ie http://winsome.com.bd http://www.thedailystar.net http://topnewswiki.blogspot.com UNCTAD (Ed.), Operation and Effects of the Generalized System of Preferences.

Reviews 1-10. United Nations Conference on Trade and Development, Geneva.

Withdrawal of GSP Facilities Threat for RMG Export Earnings (By- Anu Mahmud) Alexandraki, K., Lankes, The impact of preference erosion on middle- income

developing countries. IMF Working Paper No. 169.
http://www.dailyprimenews.com/http://archive.thedailystar.net/http://www.google.com/http://risebd.com/http://www.newstoday.com.bd/http://www.fibre2fashion.com/http://www.steinandpartners.com/http://www.revenue.ie/http://winsome.com.bd/http://www.thedailystar.net/http://topnewswiki.blogspot.com/http://topnewswiki.blogspot.com/http://www.thedailystar.net/http://winsome.com.bd/http://www.revenue.ie/http://www.steinandpartners.com/http://www.fibre2fashion.com/http://www.newstoday.com.bd/http://risebd.com/http://www.google.com/http://archive.thedailystar.net/http://www.dailyprimenews.com/

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