An international clothing retailer has included a new clause in transactions stating that if a country faces sanctions from the US, UN, EU, or UK, no letter of credit (LC) transactions will be processed.

This clause was attached while placing an order with a local garment supplier. The clause explicitly specifies that transactions won’t proceed if a country, region, or party gets sanctioned. The buyer mentioned it won’t be held responsible for any delays or issues regarding non-performance due to sanctions, as reported by Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). However, Hassan didn’t reveal the names of the involved local supplier or the buyer.

Hassan promised further clarification on this matter later in the day, aiming to shed light on the context and implications of this unprecedented clause in the LCs.

According to Hassan, while US retailers and buyers usually include such clauses in LCs, it’s the first instance where this particular buyer has explicitly mentioned it in the LC.

The concern regarding sanctions came into the spotlight following a letter sent by the Bangladeshi mission in Washington to the commerce ministry. The letter highlighted the looming possibility of Bangladesh facing trade sanctions due to concerns regarding labor rights situations.

This new clause has raised concerns within the garment industry, prompting discussions about its potential impact on trade and transactions between global retailers and local suppliers.