Big Government & Big Labor Against Poor Bangladeshis

 What A Knee Jerk Reaction By The Current Administration

On 06/28/2013 a headline in the Wall Street Journal reads “U.S. Suspends Bangladeshi’s Preferential Trade Status”. It reads (Emphasis added): “The U.S. suspended its preferential trade treatment for Bangladesh on Thursday, a largely symbolic move to punish the country for poor labor practices that attracted world-wide attention after a garment factory collapsed in April, killing more than 1,100 workers. President Barack Obama carved the South Asian country from a trade framework that eliminates certain U.S. import duties for select developing economies.  The suspension, which will begin in about 60 days, is expected to raise U.S. import duties on some Bangladeshi goods, including golf equipment and ceramics, but would have little effect on the garment industry, which dominates the country's international trade. The decision marks a victory for U.S. labor leaders, who have criticized the labor laws and worker safety in Bangladesh. AFL-CIO President Richard Trumka said the suspension "sends an important message to our trading partners." Sen. Robert Menendez, chairman of the Senate Foreign Relations Committee, which held a hearing this month on labor issues in Bangladesh, hailed the move, saying, "We cannot and will not look the other way while workers are subjected to unsafe conditions."  Nine other Democratic senators had asked the Obama administration to impose the trade penalty, and others have called on global retailers, many based in the U.S., to take action to improve worker safety in Bangladesh. … Once Bangladesh's suspension takes effect it may not find itself singled out for long. The legislation governing GSP [Generalized System of Preferences] is set to expire at the end of July, and supporters face an "uphill battle" to renew the trade framework by then …”

Consequences Of Punishment

Let’s preface this by saying that such measures were not long ago considered to be imperialistic. It is certainly a form of interference with the domestic affairs of a sovereign nation. As a free market defender I abhor preferential treatments of any kind in foreign trade.

I am not sure why the WSJ called these punishments symbolic since they also mention that the GSPs are set to expire on 7/31/2013.

Those workers in Bangladesh whose products were singled out will be hurt. For what reason?

The WSJ also reported that US importers are already looking for other source countries for those products for which import duties are slated to rise.

Alternatives?

Western governments can certainly offer assistance to the Bangladeshi government in establishing safer workplaces etc. and how to investigate and prosecute accidents and the like.

Bangladesh’s Economic Miracle

Like China or India thanks to more free and open markets Bangladesh, one of the most densely populated and poor countries of the world, has staged a remarkable economic boom lifting millions of its population out of abject poverty. Here is what the US Trade Representative has to say about this country.