Recommendations on initiatives to be taken by bangladesh to regain the u.s. generalized system of preferences (gsp) facilities

RECOMMENDATIONS ON INITIATIVES TO BE TAKEN BY BANGLADESH TO REGAIN THE U.S. GENERALIZED SYSTEM OF PREFERENCES (GSP) FACILITIES

ECO 502 Macroeconomics and Business Forecasting

Section: 1

08/04/2023Recommendations on initiatives to be taken by Bangladesh to regain the U.S. Generalized System of Preferences (GSP) facilities

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Group Members

ID Name

13264078 Shahriar Rawshon

13264070 Shahreen Shabnam

13164136 Anjuman Ara Islam

13164129 Monjuri Akter Laboni

13164031 Sonia Sultana

08/04/2023

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Outline

Recommendations on initiatives to be taken by Bangladesh to regain the U.S. Generalized System of

Preferences (GSP) facilities

Objective of Project

Methodology and Limitation of the Project

Introduction to GSP and Its declaration of Suspension for Bangladesh

Reasons for the Suspension of GSP

Impact of the Suspension

Plan to Regain the GSP Facilities

Progress in Getting Back GSP Facility

Recommendations for Getting Back GSP Facility


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Objectives of the project

Gather an understanding of the context which led Bangladesh to lose the US GSP facilities.

Measure the impact of this cancellation on Bangladesh economy.

Capture the steps taken by Bangladesh till date to regain the facilities.

Highlight the gaps which are preventing Bangladesh from regaining the facilities.

Recommend steps which will ensure that Bangladesh regain the GSP facilities.


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Methodology and Limitation

Methodology• Theoretical study based on secondary sources:

• Journals, Newspapers • Research articles, Thesis papers • Online news and survey reports, relevant

websites• Books and articles

Limitation• Information gap between different data sources

Recommendations on initiatives to be taken by Bangladesh to regain the U.S. Generalized System of Preferences (GSP) facilities

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Declaration of GSP Suspension for Bangladesh

27 June 2013 - a bolt from the blue US President Barack Obama: “I have determined that it is appropriate

to suspend (GSP facility for) Bangladesh because it’s not taking steps to offer internationally-recognised rights to workers in the country.”

04 June 2013, Foreign Minister Dr. Dipu Moni: “The review of the GSP facility for Bangladesh in the US market is continuing. The hearing on it has concluded. A Bangladeshi team comprising officials from the foreign ministry, labour and employment ministry, and commerce ministry have discussed the issue with the US authorities. I am hopeful that the USTR will take a positive decision on this.”

GOB reaction: “unfortunate” and “harsh”; outcome of a protracted negative campaign.

Foreign Office statement: “Indeed a section of people, inside both Bangladesh and the USA, had long been campaigning to this effect. Bangladesh was absolutely “respectful of a trading partner’s choice of decisions” but “expresses its deep concern that this harsh measure may bring in fresh obstacles in an otherwise flourishing bilateral trade”.

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What is GSP?

The U.S. Generalized System of Preferences (GSP) instituted on January 1, 1976, by the Trade Act

of 1974 program designed to promote economic growth

in the developing world providing preferential duty-free entry up to 5,000 products imported from one of 123

designated beneficiary countries and territories


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GSP (cont.)

Eligible products for duty-free treatment under GSP include

Most manufactured items

Many types of chemicals, minerals and building stone

Jewellery

Many types of carpets

Certain agricultural and fishery products

Not-eligible products for duty-free

treatment under GSP includeMost textiles and

apparel

Watches

Most footwear, handbags, and

luggage products


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Suspension of GSP

US suspended trade privileges for Bangladesh

This decision brought tariffs back on

Bangladesh's export-garment

The suspension underlined lack of improving factory

conditions.


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Reasons for the suspension of GSP

Incident of Tazreen's fire

Incident of Rana Plaza's collapse

AFL-CIO pressure

0ther reasons-• Failure of prosecution of the murder of labor

leader• The Govt. treatment of Professor Yunus• US disappointed with Bangladesh's governance• Bangladesh-US relationships

Impacts of the suspension

08/04/2023Recommendations on initiatives to be taken by

Bangladesh to regain the U.S. Generalized System of Preferences (GSP) facilities

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The suspension does not directly affect the country’s multi-billion-dollar clothing exports to the US due to lack of GSP.

Non-garments export is less than 1% of Bangladesh’s exports to the US ($4.9 billion).

the European Union has expressed the opinion that a decision to withdraw the Generalised System of Preferences for Bangladesh should be avoided

Plan to regain the GSP facilities



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Government Inspections for Labour, Fire and Building Standards • Develop, in consultation with the International Labour

Organization (ILO) to increase the number of government labour, fire and building inspectors, improve their training and credible inspections

• Create a publicly accessible database• Increase fines and other sanctions, including loss of

import and export licenses

Bangladesh Action Plan 2013 to reinstate GSP• The United States Government encouraged

the Government of Bangladesh (GOB) to take significant actions to provide GSP benefits

Continue...



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Ready Made Garments (RMG)/Knitwear Sector • Continue to expeditiously register

unions that present applications • Register non-governmental labour

organizations • Publicly report information on the

status and final outcomes of individual union registration applications,

• Develop and implement mechanisms, including a training program



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Export Processing Zones (EPZ)• Commit to a timeline for expeditiously bringing the EPZ

law into conformity with international standards • Issue regulations that, until the EPZ law has been

repealed or overhauled

Shrimp Processing Sector • Actively support ILO and other worker-employer

initiatives in the shrimp sector according to the memorandum of agreement on the month of march 2013

• Publicly report on anti-union discrimination or other unfair labour practice complaints received and labour inspections completed

Continue....


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Progress in getting back GSP facility

Terms and conditions

Working on US Action plan

Safety standard for garments factory workers

Assurance of security in The Workplace

Formulation and enacted laws to secure workers right


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Progress in getting back GSP facility(cont…)

• Improvement of labor situations;

• Safety standard for garments factory workers;

• Assurance of security in the workplace.

Terms and conditions


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• Protecting workers right;• Fulfilling the preconditions;• Imposition of stiffer penalties for the violation of labor laws.

Working on US Action plan


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• Appointed additional inspectors;

• Setting up of fire station;• Suspended the operations of 20 factories;

Safety standard for garments factory workers


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Assurance of security in The Workplace• Anti harassment committee;• Gender committee;• Anti sexual and physical abuse

committee;• HRM department;• Compliance department;• Workers participation committee.


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Formulation and enacted laws to secure workers right• Adapted 'Labor law 2013’• Registered 120 new unions in the

garments sector• Update The EPZ laws to stop

harassment and arrest of labor organizers


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Recommendations for getting back GSP facility

There should be a two-fold strategy for Bangladesh to getting back GSP facilities. 1. Work on the Bangladesh Action Plan 2013

and 2. Leverage Bangladesh’s importance to the

US government for negotiation.


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Recommendations for getting back GSP facility(cont…)

• Along with the suspension of the GSP facilities, the US administration provided a “roadmap” to regain the GSP for which Bangladesh has to undertake the following steps: • Enforcement of building code, • Reformation of existing labour, • Upgrading law for EPZs, • Allow registration of unions and • End harassment and arrest of labour

leaders, workers and activists.

1.Work on the Bangladesh Action Plan 2013




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Bangladesh should increase the momentum at which changes are made at present.

The government should continuously engage all stakeholders to update them on the initiatives undertakenTo convince stakeholders about the strong intent of Bangladesh government and business leaders in the RMG sector to bring about positive changes in the overall working conditions backed up with actionsTo convey the message that the actions will not stop once the GSP facilities are reinstated, but will continue to take placeThey also need to win the confidence of the US administration and strongly communicate that while Bangladesh is doing its partUS should reciprocate by reinstating the GSP facilities based on what is being done, rather than suspending the facilities based on what is yet to be done.


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• Despite the suspension of GSP, the US has been appreciative of the current government’s strong action to root out the terrorist elements from Bangladesh.

• There is a common perception that Bangladeshi diplomats are not as effective as foreign diplomats on the negotiation table.

• Irrespective of the government elected in Bangladesh, the country is strategically important for the US because of its geographical location.

• Many strategists suggest that the US is interested to constitute a kind of security (non-military) alliance to confront North East Asia’s instability and China’s supremacy in the Asia-Pacific region with India, Australia, Philippines and Japan. Bangladesh and Myanmar could also be included in the loop.

• Bangladesh provides the largest peacekeeping personnel at the UN conflict zones and is well appreciated internationally for their performance

2. Leverage Bangladesh’s importance to the US government for negotiation.


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Conclusion


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Thank You Everyone

Education

Recommendations on initiatives to be taken by bangladesh to regain the u.s. generalized system of preferences (gsp) facilities