In a proclamation Thursday, Obama said he was "providing notification of my intent to suspend the designation of Bangladesh as a beneficiary developing country under the Generalized System of Preferences program," which permits the president to deny such status "if such country has not taken or is not taking steps to afford internationally recognized worker rights in the country (including any designated zone in that country)."
Obama said he has "determined that it is appropriate to suspend Bangladesh's designation as a beneficiary developing country.
The Wall Street Journal reported the move was a mostly symbolic attempt to punish Bangladesh for incidents at garment factories, including a building collapse that killed more than 1,100 in April.
The suspension of Bangladesh's trading is expected to take effect in about 60 days, and is likely to lead to higher duties on some Bangladeshi imports, but not on the garment industry, the newspaper said.
U.S. Senate Democrats had asked the administration to impose a trade penalty, the Journal said.
Bangladeshi lawmakers are considering legislation to address concerns about worker safety, the newspaper said.
The New York Times said trade analysts expect the move will increase pressure on Bangladesh to upgrade safety and improve treatment of workers in factories.
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