Crazy Backward Policy Toward Bangladesh

K. William Watson It is widely expected that the Obama Administration will act today to suspend Bangladesh from the Generalized System of Preferences (GSP) program in response to a complaint from U.S. labor unions. Under the GSP program, some imports from some low-income countries can enter the U.S. market without paying tariffs. (Sallie James has done excellent work describing the pros and cons of this policy from a free trade perspective). Supporters of the suspension point to recent deadly industrial accidents to argue that Bangladesh needs stronger labor laws before being allowed to benefit from GSP tariff rates. In truth though, suspending Bangladesh from the program has zero chance of improving working conditions or wages in Bangladesh. First off, less than 1 percent of Bangladesh exports to the United States currently enjoy low tariff treatment under the program. The vast majority of the $5 billion worth of Bangladeshi goods entering the United States every year are apparel products, which are exempt from GSP and have always faced steep tariffs. In other words, revoking GSP access is not a very big stick to use to get Bangladesh to change its labor laws. Second, if access to the U.S market through the GSP program is meant to help Bangladesh, wouldn’t revoking that access harm Bangladesh? Indeed, the success of the suspension depends on it. Proponents of the suspension claim that increasing tariffs will prompt the Bangladeshi government to change its laws. This logic...
Source: Cato-at-liberty - Category: Health Medicine and Bioethics Commentators Authors: Source Type: blogs