But Bangladeshi officials, desperate to persuade major Western fashion retailers to stay put, said it had enacted a series of reforms since the April 24 collapse of a factory complex in which 1,129 people were killed -- the latest in a series of disasters to blight the industry.
"It cannot be more shocking for the factory workers of Bangladesh that the decision ... comes at a time when the government of Bangladesh has taken concrete and visible measures to improve factory safety and protect workers' rights," a foreign ministry statement said.
"While Bangladesh is absolutely respectful of a trading partner's choice of decisions, it expresses its deep concern that this harsh measure may bring in fresh obstacles in an otherwise flourishing bilateral trade."
The duty-free trade privileges had been accorded to Bangladesh under a programme known as Generalized System of Preferences(GSP)that eliminates tariffs on imports from 127 countries to aid their development.
Although the GSP programme does not cover the garment industry, the move is an embarrassment for the Bangladeshi government which is desperate to convince foreign firms that it is serious about improving safety.
In its reaction, the foreign ministry listed a series of recent reforms introduced since the April collapse to ensure safety, including changes to labour laws and a deal with the International Labour Organisation.
Gowher Rizvi, a foreign policy adviser to Bangladeshi Prime Minister Sheikh Hasina, said he hoped the US would be persuaded to reverse its decision before the end of the year.
"We're very hopeful that in six months the US will review our GSP status and restore our privileges," he told AFP.
Garment industry bosses as well as the government have been trying to persuade Western fashion firms not to move production out of Bangladesh in the wake of the nine-storey Rana Plaza factory complex's collapse.
But some campaigners remain unconvinced, mindful that previous pledges to address safety concerns that followed earlier disasters fizzled out.
A top labour rights activist said Friday that the recent reforms were largely cosmetic.
"Bangladesh's government was given plenty of time to improve labour safety and rights before the US cut GSP privileges. Even a series of disasters could not wake it up from slumber," Kalpona Akter, head of the Bangladesh Center of Worker Solidarity, told AFP.
"It was only after the Rana Plaza tragedy that it took some action ... but many of the moves are cosmetic. Some clauses of the amended labour laws are anti-worker and labour leaders continue to face harassment."
During a debate earlier this month on the amended labour laws, union leaders lined up to reject them as a "sham", saying they would not ensure proper rights for the more than three million garment workers.
Bangladesh is the world's second largest garment producer after China and the industry is the mainstay of the economy, accounting for 80 percent of the country's $25 billion annual exports.
Garment workers can earn as little as $38 a month, a wage described by Pope Francis as akin to slave labour.
Under pressure from consumers and labour groups, international clothing giants like Spain's Inditex and British retailer Marks & Spencer have agreed to join an industry safety accord, which calls for independent factory inspections and the right for employees to refuse to work.
Major US retailers like Gap and Wal-Mart have not joined, but are reportedly creating their own group to promote factory safety.Major international brands like Italy's Benetton, Britain's Primark and Spain's Mango all had clothing made at the Rana Plaza complex, which was home to five separate garment factories.