By SYED ZAIN AL-MAHMOOD
DHAKA–The U.S. is considering dropping Bangladesh from a list of developing countries that receive preferential trade access in the wake of a garment factory fire in November that killed 112 people, exposing the nation’s poor working conditions.
An official at the U.S. Trade Representative’s office said it would decide by the spring whether to withdraw, suspend or limit Bangladesh’s duty-free benefits under the Generalized System of Preferences, a World Trade Organization arrangement that allows for special treatment of the world’s poorest countries.
“Even before the November 24 fire at the Tazreen garment factory, the administration had reached the conclusion that too little had been done to address worker rights concerns in Bangladesh,” the U.S. trade official said. “The fire has only intensified our concerns.”
The fire at Tazreen Fashions Ltd. has drawn attention to workers’ complaints about poor pay and lax safety standards in Bangladesh’s garment industry, which has ramped up production to become the second-largest supplier after China.
The fire also exposed limitations in foreign brands’ attempts to ensure their clothes are only made in factories that pass rigorous inspections by third parties. Tazreen was producing clothes for Wal-Mart Stores Inc., Sears Holdings and others, despite failing fire-safety audits. Both Wal-Mart and Sears said clothes were being made at the factory without authorization and fired suppliers that had placed those orders.
The revocation of duty-free access to the U.S. won’t hobble Bangladesh’s economy overnight as Washington already excludes garment exports from the list of goods it allows in duty-free. Imports from Bangladesh under the program in 2011 totaled only $26 million, including sports equipment, kitchen appliances, and plastic products.
But a decision by the U.S. to scale back benefits could heighten pressure on foreign brands to continue to reduce orders from Bangladesh factories. Some companies already have done so: Nike Inc. says only eight of the 896 factories it worked with globally in 2011 were in Bangladesh.
Bangladesh also will be keen to ensure the European Union doesn’t consider similar moves to those the U.S. is mulling. The E.U., which purchases two-thirds of Bangladesh’s $19 billion annual apparel exports, does allow duty-free garment imports. The U.S. buys about a quarter of Bangladeshi apparel exports.
Those involved in the industry, which accounts for 80% of total exports and employs 3 million people, are pushing back against the U.S.’s potential revocation of duty-free access.
Mahbub Ahmed, the top official in the nation’s Commerce Ministry, said the government is preparing a document highlighting progress made in labor rights and working conditions to try to sway the U.S. trade representative.
“We want to make clear the progress we have made in implementing workers’ rights in all our export industries, including garments, in the last two decades,” said Mr. Ahmed. “Working conditions in Bangladesh will not become the same as the West overnight. But we’re making progress: We’ve eliminated child labor and many of our newer factories are world class.”
The country’s clothing industry has boomed in recent years, in large part due to a minimum wage of $37, significantly lower than China’s. But there’s been instability, too, as workers last year went on strike for better pay and conditions.
Factory owners responded by locking the workers out for days at a stretch. Police have also arrested scores of protesters. Local news reports of the death of a garment-worker activist, Aminul Islam, who was discovered in April with signs of torture on his corpse, have added to the tense atmosphere.
During a visit to Dhaka last year, U.S. Secretary of State Hillary Clinton urged the government to conduct an independent investigation into Mr. Aminul’s killing, saying failure to do so would send the wrong signal to foreign clothes companies. Such a probe hasn’t happened and Bangladesh police have failed to arrest anyone for his murder.
Mr. Ahmed said U.S. Trade Representative Ron Kirk wrote Bangladesh’s Commerce Ministry last month seeking rapid progress on several key issues, including labor rights in the garment and shrimp industries, improved fire safety, and better conditions in special export zones. The U.S. trade representative’s office declined comment.
The move by Mr. Kirk came after 12 members of U.S. Congress wrote the U.S. trade representative’s office last month, complaining about lack of progress on labor reform. The AFL-CIO, the U.S.’s largest federation of unions, also has called for a review of Bangladesh’s duty-free access.
Some Bangladeshi observers said it would be counter-productive to punish the country, which has improved labor conditions in recent years.
Ahsan Mansur, an executive director of the Policy Research Institute, a Dhaka-based think tank, said the garment industry offered higher labor standards than those prevalent in other industries like jute production.
“Taken in the overall context of rural poverty, which is less visible to western observers, it is a significant improvement,” he said.
In a 2011 study by McKinsey & Co., 93% of U.S. and European suppliers surveyed said labor standards in the Bangladeshi garment industry had improved over the previous five years. However, they reported large differences between factories.
Source: The Wall Street Journal
