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VOL 22 NO 276 REGD NO DA 1589 | Dhaka, Saturday, August 22 2015

The GSP syndrome: Political negotiations between govts

M S Siddiqui
The signatories of the General Agreement on Tariffs and Trade (GATT) in 1979 allowed derogations to the mostfavoured nation (non-discrimination) treatment in favour of the developing countries. Paragraph 2(c) of the
agreement permits preferential arrangements for developing countries in goods trade. This is the Enabling Clause of
GATT. This preferential treatment under the Generalised System of Preferences (GSP) is voluntary in nature for
developed countries who determine which countries receive preferences and to what extent those preferences are
Bangladesh was enjoying GSP facilities from the United States for some minor products that included, among
others, plastic, ceramic, golf shafts, carpet items etc. The trade preference was suspended in June 2013 following the
Rana Plaza building collapse. Restoration of the benefit was subject to, according to the United States Trade
Representative (USTR), improvement in labour safety and working conditions in factories.
The withdrawal of GSP on account of labour rights is a potentially powerful instrument. And although, as in the case
of Bangladesh, the impact is negligible given the poor product coverage under the US GSP scheme, the
ramifications can be quite widespread in terms of harming economic and political relations with other countries.
Not less than 57 cases relating to labour standards have been examined by the US Trade Representative (USTR)
from 1985 to 2007, 13 of which led to the withdrawal of preferences. In five cases, the preferential treatment was
later reinstated.
The labour clause of the US GSP provides for withdrawal only if a trade party is not "taking steps" to guarantee
labour standards and can be waived for reasons of national economic interest. The Unites States has been the main
proponent of conditional labour provisions in bilateral and regional trade agreements. Inclusion of labour provisions
in its GSP dates back to 1984. However, its application can be waived for reasons of national interest, leaving for the
authorities a significant margin of discretion.
Records reveal that USA holds temporary WTO waivers for tariff preferences granted to the former Trust Territory
of the Pacific Islands and for three regional preference schemes: (1) the Caribbean Basin Economic Recovery Act
(CBERA), as amended; (2) the Andean Trade Preference Act (ATPA), as amended, and (3) the African Growth and
Opportunity Act (AGOA).
The US Congress has made the CBERA programme permanent and has authorised through September 30, 2020, the
expanded tariff benefits contained in the Caribbean Basin Trade Partnership Act and subsequent legislation
particular to Haiti. The AGOA programme is authorised through September 30, 2015. In December 2009, Congress
extended the GSP and Andean trade preference programmes to December 31, 2010, continuing an existing denial of
benefits to Bolivia. While Congress did not renew the GSP programme, it enacted legislation in December 2010
extending Andean trade preferences, as accorded to Colombia and Ecuador, through February 12, 2011. Andean
benefits for Peru, which has been a party to a free trade agreement with the United States since February 2009, were
terminated as of December 31, 2010, in the same enactment.
The US Congress has passed the Trade Act 2015 empowering the President to allow GSP to developing countries
under certain conditions. As per the law, trade negotiation objective under section 102 (6) is to promote respect for

worker's rights and the rights of children consistent with the core labour standards of the ILO as set out in section
The Obama administration has renewed the scheme after two years of interval, for almost all countries except for
few like Bangladesh and Russia. It is important to understand that even in the cases where a legal procedure is
provided for the enforcement of the labour provisions, a considerable degree of political negotiation between
governments is involved.
The issue of labour and human rights is a reality of time. For its own sake, every country is morally obligated to
improve the situation of its industrial governance and labour rights. Bangladesh, despite many limitations, is doing
the same over the past years. Some of the steps are visible, some not. Bangladesh should go for intensive
negotiations at diplomatic level and commit itself to continued improvement in the fields of labour rights and
workplace safety. There is no gain in angry reactions or political statements.
The writer is a legal Economist.