A home ministry official told AFP that the cases of inciting violence during wage-hike protests in 2010 against Kalpona Akter and Babul Akter, the leaders of Bangladesh Center for Worker Solidarity (BCWS), will be withdrawn.
"The home minister has already directed police and the district administration to withdraw the cases," said Kamaluddin Ahmed, a senior home ministry official, explaining that "the government took generous views of the cases".
Kalpona was facing five cases and Babul six.
The US suspended the Generalised System of Preferences (GSP) in late June over Bangladesh's failure to protect the fundamental rights of workers, a decision hastened by the death of 1,129 people in the collapse of a garment factory complex in April.
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The disaster outside Dhaka highlighted appalling working conditions in Bangladesh's 4,500 garment factories where more than three million workers make clothing for top retailers such as Wal-Mart, H&M for a basic monthly wages of USD 40.
Bangladesh initially reacted with fury to the announcement by President Barack Obama but later announced a series of moves to amend labour laws in an effort to ensure trade union rights and workplace safety.
BCWS executive director Kalpona Akter welcomed the decision, but said the government could have dropped the cases much earlier.
"The cases were filed in 2010 when we were waging protests to raise worker salaries. They were lodged to harass us," Akter told AFP, adding several labour leaders including herself were detained at that time.
Another BCWS leader was murdered in 2012 but there has been no progress in the case. Union leaders have pointed the finger at a top security agency for the murder -- allegations that officials have denied.