After the European Union, the United States is reportedly considering stripping Bangladesh of the preferential trading status apparently to force the government to step up safety measures in readymade garment factories.
The move was prompted by a fire at the Tazreen Fashions Limited last November killing over 110 people and gained momentum after the collapse of Rana Plaza in Savar killing over 1,100 people, the Washington Post reports.
GSP or generalised system of preference that provide import tariff breaks is designed to help developing countries grow through trade. Losing the facility could cost Bangladesh millions of dollars in taxes.
Bangladesh has emerged as the second largest exporter of readymade garments products, thanks to the duty-free access offered by Western nations. Low-cost labour has made the South Asian nation an attractive option for foreign retailers. But, the workers are left with rock-bottom wages, as little as $38 a month.
However, the $20 billion industry has been plagued by accidents and criticism. Labour activists allege the owners do not pay heed to the safety of around four million workers of the sector.
After the November fire, several US lawmakers reportedly pressed the Obama administration for reconsidering the facility and Bangladesh is awaiting verdict on a petition to revoke the GSP.
A hearing on the petition was held at the Office of the US Trade Representative in Washington on Mar 28. The representatives of the American Federation of Labour-Congress of Industrial Organizations (AFL-CIO) presented the case for revoking the facilities.
This is the third time such a petition to revoke the duty-free market access has been filed since Bangladesh secured the facility in 2007.
Foreign Minister Dipu Moni on Wednesday briefed US Congressman Joseph Crawley in Washington about her government’s latest initiatives to improve working conditions at garment factories in their efforts to retain GSP facility.
Crawley, also a Co-chair of Bangladesh Caucus in the US Congress, assured her of sharing the information with his colleagues in the US Congress.
Several European nations have signed a binding inspection programme and a group of US Senators on Thursday wrote to major US retailers urging them to reconsider, and the government is also debating how to get American firms more constructively engaged, The Washington Post said in a report on Friday.
In a bid to retain the GSP facility in the US market, the Cabinet on Apr 22 approved a proposal allowing workers at factories to form trade unions.
Labour officials have agreed to fund a programme to improve Bangladesh’s factory inspection system. USTR, meanwhile, is moving forward with plans to exclude Bangladesh from import tax breaks given to goods from developing countries.
US officials said the decision was made several months ago to begin pressuring Bangladesh for improvement in its labour conditions. The process intensified after the nine-storied Rana Plaza collapse.
The illegally constructed building housed five readymade garment units which used to produce goods for western retailers. The victims are mostly female workers working in those factories.
After the Apr 24 building collapse, the EU threatened to reconsider its trading facility with Bangladesh. The 27-nation bloc imports around 60 percent of Bangladeshi products and it currently enjoys the most generous level of GSP in the region. The EU hopes Bangladesh would take steps to keep hold of its biggest market.
Usually a flurry of promise follows industrial accidents. After the 2007 collapse of Spectrum garments factory on the outskirts of Dhaka killing over 50 people, authorities promised to ensure workers’ safety. Such promises followed the Tazreen fire. But little has been done.
The United States Trade Representative (USTR) recently said “the lack of progress by the government of Bangladesh in addressing worker rights issues . . . warrants consideration of possible withdrawal” of benefits, the Washington-based web portal reported.
A Bangladesh delegation is currently in Washington lobbying to retain the facilities and to convince the USTR, Labor and the State Department that the country is seriously working on changing labour laws, prosecuting crimes against labour leaders and making other long-sought changes.
During her 2012 visit, former US Secretary of State Hilary Clinton raised concerns over the murder of labour activist Aminul Islam.
“We reached the conclusion that things were not moving forward, and we needed to do something dramatic,” The Washington Post quoted a US trade official as saying.
Outside the EU, the United States is Bangladesh’s biggest market, which accounts for 23 percent, or $4.53 billion in import.
Export of readymade garment products count for up to 80 percent of the country’s export income.
Source: UNBConnect
