Savar crash ignites EU actions threat

Savar
The European Union has threatened to suspend Bangladesh’s preferential trading status unless it improved safety standards in its readymade garment factories.

“This is about firing a shot across the bows of Bangladesh to get them to engage on the issue,” an EU official told Reuters News agency.

“We want to turn up the diplomatic heat on them and get them to sit down and discuss this with us.”

The warning comes as a multi-storied building, housing several readymade garments factories, collapsed at Savar on Apr 24, leaving over 400 confirmed dead and scores of other missing.

Bangladesh has emerged as the second largest exporter of readymade garments trailing China, thanks to the duty-free access offered by Western nations.

Losing the facility in the European markets under generalised system of preferences (GSP) could cost Bangladesh hundreds of millions of dollars in duties, Reuters says in a Brussels-datelined report.

Bangladesh currently enjoys the most generous level of GSP in the region which imports around 60 percent of its products. GSP is designed to help developing countries grow through trade.

If it were outside the GSP, it would face normal import duties, which are 12 percent for many clothing items ranging from men’s jackets to women’s blouses.

EU officials hope the threat of action would be enough to make the country change its laws to keep hold of its biggest market.

This is the second such warnings from the European Union this year. The 27-nation bloc in a statement urged Bangladesh to “act immediately” to ensure factories across the country “comply with international labour standards”.

The EU imported roughly 9.2 billion euros of goods from Bangladesh last year, according to data from the EU’s executive body, the European Commission, headquartered in Brussels. Textiles and textile products from clothing to towels and bedding accounted for almost 93 percent of those goods.

After a garment factory fire killed six persons, the bloc called on Bangladesh in January this year to ensure its factories complied with the International Labour Organization (ILO) standards.

In the past the bloc used access to trade preferences as leverage in dealing with countries.

Fire at another factory last November killing over 110 people had prompted US lawmakers to call for suspending its GSP programme with Bangladesh.

After every major industrial accident, authorities promise to ramp up security measures and improve work conditions at factories.

IndustriAll Global Union, a Swiss-based body representing 50 million workers worldwide, has served a May 15 deadline for the Western retailers for a commitment for fire and building safety plan for Bangladesh.

It said funds will be made available for inspection training and upgrades of dangerous facilities in the county and called on the retailers to pay the suppliers more.

However, any action from the EU would likely take more than a year since it would have to launch an investigation into concerns over labour conditions in the country, after consulting with European governments.

Only after the investigation would the Commission decide whether or not to temporarily withdraw Bangladesh from the GSP scheme. The decision would need to be approved by the EU members.

Bangladesh is also awaiting verdict on the petition to revoke the GSP that it enjoys for the US market access and the worst industrial accident in its history is not helping the cause of retaining the facility.

A hearing on the petition was held at the Office of the US Trade Representative in Washington on Apr 28. The representatives of the American Federation of Labour-Congress of Industrial Organizations (AFL-CIO) presented the case for revoking the facilities.

The USTR officials did not say anything specific after the hearing, but the commerce secretary said they were kind of assured by the measures taken by Bangladesh.

The Rana Plaza collapse was the third major accident in past six months raising questions about worker safety and labour conditions in Bangladesh. Clothes made in five factories inside the illegally constructed building were produced for retailers in Europe and Canada.

In the year to June 2012, Bangladesh’s garment exports to the EU rose to $11.37 billion from $10.52 billion a year earlier, according to the Commerce Ministry. Germany is the main EU market at $3.4 billion, followed by the UK at $2.13 billion, Spain at $1.71 billion and France at $1.27 billion.

Outside the EU, the United States is the biggest market, which accounts for 23 percent, or $4.53 billion.

Around four million people, mostly women, work in Bangladesh’s garment industry. Most of the workers toil hard for as little as $38 per month.

Source: Bd news24

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