U.S. curbs Bangladesh trade privileges

A Bangladeshi man cries for a missing relative, believed to have died in the rubble, after an apparel factory building collapsed and killed over 1,100 workers in April.

The government said it would no longer allow duty-free imports of certain products made in Bangladesh under a program that helps encourage trade with developing countries by providing breaks on tariffs.

The trade decision comes as Bangladesh is facing mounting international pressure to improve working conditions after a series of fatal fires last year killed hundreds, and a building collapse in April killed over 1,100 workers. Almost all of the accidents have happened in its apparel industry. Bangladesh is the fourth largest exporter of clothes to the U.S., behind China, Vietnam and Indonesia.

However, the U.S. decision isn't expected to affect clothing imports, because apparel isn't covered under the duty-free program.

Related: Bangladesh: Cheap clothes lead to danger and tragedy

The program is part of a global effort overseen by the World Trade Organization and applies to imports from developing countries. Thursday's curbs is likely to affect imports of tobacco products, sports equipment, china and plastic products from Bangladesh, according to the country's embassy.

In 2011, the U.S. imported $26.3 million worth of goods that got duty free breaks under the program, according to trade records. That's less than 1% of the more than $4 billion of Bangladesh exports to United States.

"While (it) doesn't cover garments from Bangladesh, it's still important to U.S. companies purchasing goods from Bangladesh under the program, such as ceramics and dinnerware," said Daniel Anthony, research director at the Coalition for GSP, an advocacy group for the program funded by U.S. companies and associations.

The government of Bangladesh described the development as "unfortunate."

"While Bangladesh is absolutely respectful of a trading partner's choice of decisions, it expresses its deep concern that this harsh measure may bring in fresh obstacles in an otherwise flourishing bilateral trade," the Ministry of Foreign Affairs said in a statement.

Related: Why I'm protesting against Gap over Bangladesh

The U.S. program granting duty free status to developing nations was already set to expire July 31.

The program can be extended only if Congress acts by the deadline, which doesn't look likely so far, according to congressional aides and lobbyists.

In 2011, Congress renewed the program retroactively. But the dire budget situation combined with forced spending cuts could reduce enthusiasm for a trade program that eats into U.S. revenue.



Labor unions have been pushing the Obama Administration to respond to labor and safety problems in Bangladesh.

"The AFL-CIO hopes that the suspension of benefits will be a catalyst to accelerate an effective process involving the government, employers and workers of Bangladesh to achieve these goals," President Richard Trumka said in a statement.

Bangladesh is among more than 120 countries that gets tariff breaks under the program, known as the U.S. Generalized System of Preferences.

Related: Bangladesh pay hike would cost shoppers only pennies

"I have determined that it is appropriate to suspend Bangladesh's designation as a beneficiary developing country under the GSP program because it is not taking steps to afford internationally recognized worker rights to workers in the country," President Obama wrote in the proclamation.

Bangladesh's working conditions are also in the spotlight in Europe. The European Union is considering a move to revoke Bangladesh's duty free privileges also on clothing, which could really really hurt the country.

Apparel is Bangladesh's top business and makes up 80% of exports. The average worker in the garment industry in Bangladesh makes between 10 and 30 cents an hour, and many of the factories do not have windows, fire escapes or emergency exists, according to labor rights activists.

The Bangladeshi government has turned a blind eye to working conditions in an effort to entice retailers with low costs. International governments are now amping up the pressure hoping that Bangladesh will step up its vigilance over its country's factories.

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Mongolian president wins second term amid focus on mining curbs

ULAN BATOR - Mongolia's incumbent president, Tsakhia Elbegdorj, who wants more controls on foreign mining investments, has emerged as the winner of Wednesday's polls with a narrow majority of votes cast, the country's election commission said on Thursday.

Elbegdorj, 50, who has served as president since 2009, was the overwhelming favorite in the contest, played out amid worries about Mongolia's faltering economy as well as the growing role of foreign mining firms.

The commission said Elbegdorj got 50.23 percent of the votes, beating a former wrestling champion, Bat-Erdene Badmaanyambuu of the Mongolian People's Party, and health minister Udval Natsag, of the Mongolian People's Revolutionary Party.

The lower-than-expected margin of victory could be traced to low turnout, said Julian Dierkes, an expert in Mongolian politics at the University of British Columbia, adding that participation was 10 percent lower than the last election.

"The consensus was that Elbegdorj was winning and I suspect that a lot of potential voters thought he was winning anyway, and didn't vote," said Dierkes, who is in Ulan Bator to monitor the election.

Elbegdorj's narrow victory, even if it is not contested by the opposition, is not expected to allay the concerns of foreign investors worried about growing government interference in the country's booming mining sector.

The win preserves the dominance of the Mongolian Democratic Party, which won the most seats, though not an absolute majority, in last year's parliamentary vote, and heads a coalition government keen to regulate foreign investments.

Elbegdorj is a free-market advocate, but his government has increasingly adopted a more "resource nationalist" approach, with laws to give the country a bigger stake in "strategic assets", such as mines.

It also aims to rework a landmark 2009 investment pact to develop the massive Oyu Tolgoi copper and gold mine.

The vote took place amid rising concern over Mongolia's resource-dependent economy, with falling commodity prices and weakening demand from China expected to erode growth and undermine spending plans.

The economy grew 12 percent last year and 17 percent in 2011, as mining investment poured in and mineral exports to China surged.

But growth could slow to 5.5 percent in 2013, the Mongolian Investment Banking Group said this week, if the Oyu Tolgoi project is not launched on schedule.

Mongolia is in dispute with Anglo-Australian mining giant Rio Tinto over how it will repatriate profits from Oyu Tolgoi, whose launch has been delayed twice this month.

A controversial new mining bill championed by Elbegdorj will also be high on the agenda.

"The biggest implication is continuity -- his campaign was that he had done well for four years and wanted a chance to do more," said Dierkes. "But mining and resources is on the top of everyone's agenda and here he will keep going."

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