The Generalized System of Preferences, or GSP, is a preferential tariff system

which provides for a formal system of exemption from the more general rules of the
World Trade Organization.
It is the exemption from the most-favored-nation (MFN) principle. MFN requires WTO
member-countries to treat imports coming from all other members equally, that is,
by imposing equal tariffs on them, etc. GSP exempts WTO member-countries from
MFN status for the purpose of lowering tariffs for the least developed countries
(LDCs), without also lowering tariffs for the rich countries. The GSP was established
to promote exports of low-income countries to industrialized ones in order to
support their economic growth and development.
The US administration has renewed the GSP facility for the developing and least
developed countries of the world after it suspended it for the last two years on
expiry of the earlier legislation. But surprisingly, Bangladesh is the only country
along with Russia which was excluded from the list of 122 beneficiary countries for
duty-free market access of their exports to the USA.
Bangladesh was entitled to enjoying GSP facility from 1980 although its major
exports to the USA, including ready-made garments, remained excluded from the
benefit, denying the real business opportunity that Bangladesh could harvest under
the concessional trade access. The US suspended GSP facility to Bangladesh after
the Rana Plaza disaster in 2013.
The exclusion of Bangladesh resulted mainly from its apparent failure to fulfill all of
the 16 conditions that the Obama administration had laid out when it revoked the
privilege two years ago on grounds of poor workplace safety and labor rights.
Although RMG is not included in the GSP facilities commodity list of almost 5,000
items. It is estimated that, of the $5bn exported annually to the US, 95% comes
from the RMG sector, so the lack of GSP facilities actually only impacts our exports
to the US by 5%, which means an export loss for some small industries in the
country, namely, ceramic products, tobacco, etc. But, since the incidents of 2013,
Bangladeshs image as a trade partner of the USA is tainted. This may discourage
US and other foreign investors, new and old, from venturing into Bangladesh, which
may have a moderate effect on the prospect of future export growth of the country,
particularly in US market.
According to the Bangladesh Economic Review (2014), during the last three years
there was no significant foreign direct investment inflow from the US to Bangladesh.