The US on Thursday suspended trade privileges for Bangladesh, citing lack of labour reforms and inability to ensure workers’ rights.

The Generalised System of Preference (GSP) is a 37-year-old trade preference program under which the United States provides duty-free treatment to many imports from developing countries.

“I have determined that it is appropriate to suspend Bangladesh’s designation as a beneficiary developing country under the GSP program because it is not taking steps to afford internationally recognised worker rights to workers in the country,” President Barack Obama said in a message to the Congress after issuing a proclamation in this regard.

Such a move by the Obama Administration would have a major impact on the garments industry in Bangladesh, which is one of the major foreign exchange earners for the country.

“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 and tragedies like the Rana Plaza building collapse and Tazreen Fashion factory fire can be prevented,” Mike Froman, the US Trade Representative said.

The suspension will become effective 60 days after the publication of the presidential proclamation in the Federal Register.

Froman said the US GSP statute requires certain basic standards for worker rights and worker safety as a condition of eligibility.

“Despite our close engagement and our clear, repeated expressions of concern, the US Government has not seen sufficient progress towards those reforms,” Froman said.

In 2012, the total value of imports that entered the United States duty-free under GSP was $ 19.9 billion, including $ 34.7 million from Bangladesh.

The United States will continue to accept imports from Bangladesh following this decision; however, none will be eligible for duty-free treatment under GSP while Bangladesh’s benefits remain suspended, the USTR said.

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