No payments if Bangladesh faces sanction, says a US retailer to its supplier

No letter of credit (LC) transactions will be processed if the country faces sanctions from the US, the UN, the EU and the UK, according to a clause attached by an international clothing retailer while placing order with a local garment supplier.

The clause stated that no transaction will take place if a country, region, or party gets sanctioned and it will not be liable for any delay or non-performance related issues, the buyer said.

"The buyer is a vendor for other retailers and brands, but it did not cite such a clause in the past," said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), without disclosing the names of the local supplier and the buyer.

Hassan said he was going to clarify it further later in the day.

The BGMEA chief said such clauses are usually stated in the LCs opened by US retailers and buyers. However, this was the first time the buyer has mentioned in the LC.

The sanction issue has hit the headlines after the Bangladeshi mission in Washington sent a letter to the commerce ministry last week, highlighting the possibility of Bangladesh falling under a trade sanction over the labour rights situation.