President Barack Obama has cut off long-time US trade benefits for Bangladesh in a mostly symbolic response to conditions in its garment industry that have cost more than 1,200 lives this year.
Thursday's move does not directly affect Bangladesh's multibillion-dollar clothing exports, since garments are not eligible for US duty cuts. But it could prompt the European Union into similar action, which would have a bigger impact as Bangladesh's clothing and textiles exports to the EU are duty-free.
"I have determined that it is appropriate to suspend Bangladesh … because it is not taking steps to afford internationally recognised worker rights to workers," Obama said.
Dhaka said it did not expect the move to have an immediate impact on business but feared it would hurt US investment in the country over time. "We are desperately trying to upgrade the situation of our garment factories and we expect assistance, not punitive action," said H.T. Imam, government adviser to Prime Minister Sheikh Hasina Wajed.
The factories came under scrutiny after the collapse of the Rana Plaza garment factory building in April that killed 1,132 people and the Tazreen factory fire in November that killed 112.
"This was not a decision taken lightly," US Trade Representative Michael Froman said. "Our goal, of course, is not only to see Bangladesh restore its eligibility for (the trade) benefits, but to see Bangladeshi workers in safe, appropriate work situations."
Richard Trumka, president of the AFL-CIO labour federation, said the decision sent an important message to countries that received duty-free access to the US under the Generalised System of Preferences programme.
"Countries that tolerate dangerous - and even deadly - working conditions and deny basic workers' rights, especially the right to freedom of association, will risk losing preferential access to the US market," Trumka said.