Bell rings for duty free access to US

Bangladesh’s GSP facility might be scrapped if govt fails to show improved labour standards

Inam Ahmed

After several years of warning to act on labour standards that fell on deaf ears, the US has finally initiated actions that may take away Bangladeshi products’ duty-free access to the US.

The United States Trade Representative on December 21, 2012 sent a letter to Commerce Minister GM Quader stating that, “We are beginning to consider options that would affect Bangladesh’s continued eligibility for benefits under the GSP”.

GSP or Generalised System of Preference is the facility that allows duty-free export from a country.

A commerce ministry top official said the US is going to have a public hearing on the cancellation of GSP in March, and unless the government can say something meaningful to pacify resentment in the US against low labour standards in Bangladesh, the duty-free facility would be cancelled.

The US has been showing its concern over labour right standards for a long time and the recent fire at Tazreen Fashions in Ashulia quickened this process.

“In near future, we will publish a notice in the Federal Register [the US government gazette] announcing that the US government is considering the removal, suspension, or limitation of Bangladesh’s benefits under the GSP based on worker rights considerations and inviting public comments on this prospective action,” the USTR letter said.

A very small 0.54 percent of Bangladesh’s total exports of $4.87 billion to the US now enjoy duty-free status. But Bangladesh has been demanding duty waiver on its garment exports which was worth $4.39 billion in 2011.

If it could get duty-free access on garments, this would have made the country’s apparels much more competitive as the US realises $720 million as duty on garments originating from Bangladesh.

“Bangladesh should urgently think up what it should tell in the public hearing. There is still a chance to avert the situation,” Dr Debapriya Bhattacharya, distinguished fellow of the Centre for Policy Dialogue, told The Daily Star.

The issue of GSP cancellation goes beyond the realm of the small amount of duty-free exports or even the big amount of duty paid on apparels.

“It would give a very bad signal to the European and other buyers that Bangladesh is not a secure place to source garments,” Debapriya said. “The government has to show some concrete achievements at the hearing, spell out the things it wants to do in future and then negotiate certain points.”

On condition of anonymity, a top commerce ministry official said if the US cancels GSP that would prove that Bangladesh has poor records of labour rights.

This would have a long-term impact on the apparel industry which right now is the second largest in the world and is poised to become the largest.

The move on cancelling GSP facility originated in 2007 when the American Federation of Labour and Congress of Industrial Organisations (AFL-CIO) sought the removal of Bangladesh’s benefits.

The AFL-CIO alleged serious shortcomings on the part of the Bangladesh government in meeting the GSP eligibility criteria related to workers’ rights.

Following this, the US government had several times raised its concern about obstacles to worker rights to freedom of association and collective bargaining.

“Unfortunately, we have seen little progress on these issues and, in our view, the worker rights situation in Bangladesh has deteriorated,” the USTR maintained in its letter.

“We continue to have concerns about the ability of newly formed unions to register and of worker associations to freely associate so that they may effectively bargain for wages and safe working conditions. In addition, we have received credible reports that workers seeking to organize unions have been fired or blacklisted,” USTR said.

“We are also concerned about what many see as a pattern of intimidation against organizations and individuals advocating for worker rights, such as interference with the operations of the Bangladesh Centre for Worker Solidarity, and lack of progress in the investigation of the April 2012 murder of labour activist Aminul Islam,” it mentioned.

“Finally, the recent Tazreen factory fire has added even greater urgency to the need for increased efforts to address occupational safety issues,” it stated.

On many occasions last year, US Ambassador Dan Mozena had warned Bangladesh of a “perfect storm” brewing over its labour issues in the garment sector which have remained unaddressed for long.

The ambassador had also expressed his surprise about why Bangladesh was refraining from signing a Trade and Investment Cooperation Framework Agreement (Ticfa) for the last four years. This agreement will make some labour issues obligatory for Bangladesh in broader context.

“We believe that Bangladesh is trying to walk away from its international obligation on labour rights,” Mozena said at a discussion with The Daily Star in July about Bangladesh’s silence over Ticfa.

Source: The Daily Star