Policy Priorities
Trade related legislation

The European Commission threatened to begin a formal investigation which could lead to withdrawal of Bangladesh’s trade preferences, due to Bangladesh’s failure to comply with a number of ILO labour rights standards. The suspension of Everything but Arms (EBA) preferences for apparel and footwear (HS Codes 61, 62, 63, 64) would impose an average of 11.1% duties on Bangladesh exports to the EU.

The Commission has also underlined its intention to work with Bangladesh (government, businesses and civil society) to reach a viable solution to avoid sanctions. The next follow-up meeting for the Bangladesh Sustainability Compact is scheduled for 18 May in Dhaka where Commission, ILO and Bangladeshi government officials will discuss and evaluate progress made in the implementation of the Compact which seeks to improve labour, health and safety conditions for workers. MEPs will debate a resolution on the state of play of the implementation of the Compact during the May plenary session. The last Compact follow up meeting was held in January 2016.

This warning is the initial step which may lead to a formal investigation of Bangladesh’s compliance with ILO labour rights standards. If a formal investigation is launched, the Commission would impose a 6-month monitoring and evaluation period, giving Bangladesh the opportunity to provide comments. If the evaluation were to reinforce the Commission’s concern that labour rights are not being protected at the ILO standard, trade preferences under the EBA scheme would be withdrawn 6 months after the Commission’s formal decision. Altogether, the time between the start of a formal investigation and the date in which preferences would be withdrawn could take anywhere from one to a few years.

The EU has (temporarily) withdrawn GSP preferences on three separate occasions in the past: Belarus (GSP), Myanmar (GSP) and Sri Lanka (GSP+). Sri Lanka submitted its application for renewed GSP+ last year and was recently approved by the Council.