The US suspended Bangladesh from its Generalized System of Preferences (GSP) scheme on 27 June 2013,
following concerns over poor labour conditions particularly after the horrific collapse of Rana Plaza. The US
Presidential proclamation confirmed that the suspension has been effectuated because Bangladesh is not taking
appropriate measures to afford internationally recognized workers rights in the country to meet the statutory
eligibility criteria of labour rights. As a general proposition any type of suspension or withdrawal of the
preferences to promote some non‐trade social objectives including labour standards, which otherwise known as
trade sanction could potentially be inconsistent with general obligation the GATT (Article 1, Article XI and Article
111:4). It has become a continuing source of confusion among WTO members and a matter of huge controversy
whether WTO law permits donor country to impose trade‐labour sanctions to uphold their own values and policies
through conditioning GSP. Developed countries are adamant to use trade sanctions for promoting labour
standards under GSP, which otherwise would directly contradict WTO law.
The main WTO instrument regulating GSP programs is the Enabling Clause 1979, which confirms a secure legal
basis of developing and LDCs to get preferences from developed contracting parties of GATT. It has placed the
concept of S&D treatment at the heart of the WTO legal system. Three kinds of debates exist in the present
literature because of the continuous ambiguity in the legal status of the Enabling Clause which leaves room for the
accommodation of trade‐labour sanctions. Firstly, whether Enabling Clause creates legal obligation on the
developed states to provide preferences to developing countries or this is just an aspiration which does not
obligate developed countries rather approve them to do so. Secondly, presuming the voluntary nature of the
preferences, does Enabling Clause subject the preferences to the WTO rules or is the Clause either an autonomous
standing‐alone provision or an exception to Article 1.1 of GATT. Lastly, if it is an exception of MFN provision then
to what extend member states can condition granting the preferences, do they have unfettered discretions to
suspend or withdraw the preferences to promote labour standards once it has been granted? The first two issues
attracted larger attention in the contemporary literature and these were also slightly addressed in EC –Tariff
Preferences dispute, where the third issue remained largely ambiguous and unsettled that generates scope for
developed country to impose trade‐labour sanctions in preferential arrangements.
Now it is high time for Bangladesh to challenge US measure before WTO dispute settlement body.
