Posted: June 27, 2013
The immediate practical impact of the U.S. decision on the country's garment industry is expected to be minimal. But it could affect the EU's thinking on more wide-ranging trade benefits.
The U.S. suspended some trade benefits to Bangladesh on Thursday, citing unsafe working conditions. But in the near term it appears unlikely to have a major impact on the country's crucial garment industry.
Here's why: Bangladesh was suspended from the Generalized System of Preferences (GSP) program, so U.S. duties will rise on a range of items from tobacco to plastic. But this program doesn't cover garments — Bangladesh's main export to America.
Less than 1 percent of Bangladesh's nearly $5 billion in exports to the U.S. are covered by the GSP, according to The Associated Press.
As Reuters notes: "Obama's decision would be a repudiation of working conditions in Bangladesh following the collapse of the Rana Plaza garment factory building in April that killed 1,129 people and the Tazreen factory fire in November that killed 112. It also could influence the European Union's decision whether to suspend trade benefits for Bangladesh, which would have far more impact since Bangladesh's clothing and textiles exports receive duty-free treatment there."
The AP reports that congressional leaders have pushed the Bangladeshi government to improve worker safety in the country.
The collapse of the Rana Plaza building has drawn attention to unsafe working conditions.
Our friends at NPR's Planet Money even asked if buying a T-shirt from the country is good or bad for its people.
But as we've reported in the past, some of the changes in Bangladesh are coming from Western retailers who use the country's cheap labor to make fast fashion.
The garment industry has low margins, and this creates great pressure to keep wages low — though there have been some efforts to improve conditions.
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