The European Union will withdraw Generalised System of Preferences (GSP) benefits for Bangladesh unless labor rights issues are addressed. In response Bangladesh has taken steps regarding ensuring workers’ trade union rights in the country’s export processing zones. Work on a database to look into trade union registration activities has also begun. A tripartite advisory committee for the garment sector has been formed to address labor-related issues.

The EU is a major destination for Bangladeshi exports. Nearly 80 to 85 per cent of the country’s total frozen fish and shrimp exports go to the EU. Bangladesh is the EU’s 33rd largest trade partner in goods and the country’s exports to the EU are dominated by clothing and textiles. Bangladesh fetched 61 per cent of its total garment exports from exporting garment goods to the EU in the fiscal year 2015-16.

If the EU withdraws its GSP for Bangladesh, duty at the rate of 12.50 per cent has to be paid and Bangladesh’s exporters stand to lose competitiveness. Suspension of the trade facility by the EU might create an adverse impact on the country’s overall trade and economy, especially on bank and insurance sectors. Earlier the United States suspended Bangladesh’s GSP benefit in June 2013.