Published: Friday, May 10, 2013

Economy

The Aftermath of GSP Hearing Get Your Act Together

Photo: Star File

Photo: Star File

Human tragedy seems to have become a regular feature plaguing the highest export earning ready-made garment (RMG) industry, putting this sector at risk in terms of losing business.

The nation’s most tragic building collapse at Rana Plaza on April 24 happened only after five months of another deadly fire at an Ashulia based garment factory Tazreen Fashions, where 112 workers were burnt alive November 24. The death toll at Rana Plaza has crossed 648 (May 6). The number of injured is innumerable. Between, Rana Plaza collapse and the Tazreen fire incident, eight workers died in another fire incident at Smart Export Garment Ltd in Mohammadpur area December 26 last year.

If the smaller fire incidents at Swan Garment and Sir Denim, in November last year at the city’s Uttara area are included, the list of such untoward incidents will just lengthen. This is just a simple calculation of disasters in the garment sector over the last five months.

Hundreds of poorly paid garment workers have lost their valuable lives in such a short span of time. The mysterious killing of labour leader Aminul Islam in April last year has put another blemish on the RMG sector.

Such recurring tragedies due to negligence have put Bangladesh, the second largest RMG supplier after China, in a precarious position. International consumers, retailers, along with global rights groups, started raising their voice against the death incidents in garment factories in Bangladesh.

Following the Tazreen fire incident, Bangladesh had to attend an emergency hearing at the United States Trade Representative’s (USTR) hearing March 28, to convince the US government for continuation of GSP (Generalised System of Preferences), a duty waiver scheme by the US government for the least developed countries (LDCs) for some selected goods facility, to Bangladesh.

The country was asked to attend the hearing while America’s largest trade union American Federation of Labour and Congress of Industrial Organisation (AFL-CIO) lodged complaints for cancellation of GSP on the grounds of poor labour rights and poor occupational safety in the factories.

Bangladesh, for the first time attended the USTR hearing for continuation of GSP, in 2007 and the second time in 2009 while a third hearing was held in January 24 last year.

A 14-member delegation attended the hearing, led by commerce secretary Mahbub Ahmed.

Since the garment trade is an international one, it goes without saying that the manufacturers should listen to the concerns of the international community. Having faced a barrage of tough questions at the USTR hearing, Bangladesh committed to a lot of reforms in industrial laws and welfare for the garment workers.

These workers who have made the garment industry the highest earner deserve a better working environment. Photo: Star File

These workers who have made the garment industry the highest earner deserve a better working environment. Photo: Star File

After returning from the hearing, the Bangladesh government has taken the initiative to amend Bangladesh Labour Laws of 2006 to accommodate more benefits for the garment workers, especially allowing trade unionism in the factories.

The cabinet has already approved the proposal for amendment of the labour law 2006 last month, mainly to persuade the US government to continue giving the GSP facility.

Although the GSP facility covers only 0.54 percent ($26million) of the total export at more than $5 billion to the US, still its significance is higher as Bangladesh will have to face an image crisis if the GSP is scrapped.

The labour and employment ministry has also conducted drives in different factories to inspect the fire safety standard and other compliances in the factories. The garment makers’ platform Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has also formed some committees to improve the working environment.

US Ambassador in Bangladesh Dan W Mozena has already said that the disaster will have impact on the verdict of GSP to the US market.

All the initiatives for improving the safety standards in the garment factories crumbled with the Rana Plaza collapse. This time it will be really difficult to convince the US government for a continuation of the GSP, as the tragedy has again exposed poor factory compliance. The country had been expecting a positive verdict from the USTR in first week of June.

After the Tazreen fire incident, not only the US government, but also the European parliament in January adopted three separate resolutions although the MPs of the EU did not bring any negative clause for the country’s garment industry. Nevertheless this is a cautionary note for the country.

This time the EU, where the country’s 60 percent garment items are exported annually, has given a statement for taking trade action against Bangladesh, through GSP. Bangladesh enjoys duty-free and quota-free facility to the EU under the GSP.

Having enjoyed such benefits, Bangladesh does not have to pay 12.50 percent duty on export of garment items to the EU market, giving the country a competitive edge compared to other countries. If the EU takes any trade action, the garment exporters will have to pay this duty.

Not only the EU, but also two senators of the US government and some international retailers and Pope Francis have also condemned the negligence of the factory owners after the incident.

More than 95 percent garment items are exported from Bangladesh to the EU and the US.

When a country loses its competitiveness, international buyers are reluctant to place work orders and this could very well be the fate of our RMG industry. With manufacturers out of business, the domino effect is inevitable: A large number of garment workers out of 3.6 million will lose their jobs.

Bangladesh has become the second largest apparel supplying country worldwide after China. China has been losing its business to Bangladesh for higher cost of production and shortage of workers. Bangladesh’s pie to the global $412 billion global garment business is a little above 5 percent. Work orders are pouring into Bangladesh for its competitiveness.

Garment manufacturers, therefore, have to take these warning signs seriously and get their act together by making sure such horrible incidents never occur again. If the country fails to improve compliance standards religiously, the dream of becoming the number one garment exporter worldwide will face a premature death, as international buyers will shy away from Bangladesh and take their business elsewhere.