The benefits of US-GSP elude Bangladesh
January 23, 2013 00:00:00
Akramul Qader in the first of a two-part article, Bangladesh in the US-GSP: An emerging nation's fluctuating trade fortunes
The Generalised System of Preferences (GSP) is one of the key administrative arrangements that govern US's concessions in foreign trade. The programme was designed in 1976 with a view to promoting economic growth mainly in the developing world. Since its launching, 128 beneficiary countries and territories have availed GSP facilities for exporting up to 5000 products to the US market. Theoretically, Bangladesh could also be among the beneficiaries. Ironically it is not.
In 2011, Bangladesh's export to the USA under the GSP scheme was worth $26.33 million compared with India's $3.7 billion and Brazil's $2.0 billion. Analyses of exports under GSP would give an identical picture for these countries in the current and previous years as well.
Notably, Bangladesh's most important export item in the US market, readymade garments (RMG), is not covered by the GSP scheme. The few goods that Bangladesh could so far export to the USA availing GSP benefits include: tobacco, plastic bags and articles, gold equipment, bone china, porcelain kitchen/table ware, cereal based prepared foods etc.
Sleeping bags was excluded from GSP on January 1, 2012. Citing "import sensitivity" the US authorities in its 2010 review withdrew the GSP benefit from sleeping bags meaning an end to Bangladesh's efforts to claim a tiny share which is otherwise a Chinese monopoly in the USA. Bangladesh's export figure in sleeping bags rose from $0.17 million in 2008 to $5.82 million in 2011. Not such a big deal compared with total US import value in this item ($87.5 million in 2011) or Bangladesh's market prospect in the most optimistic scenario. However, what was a matter of utmost concern was the fashion in which a poor trading nation was singled out from among many far superior performers to exert tariff barriers and nip all hopes in the bud. It is still impossible for Bangladesh to fathom what necessitated the US authorities to go for any such abrupt measures.
The American Federation of Labour and Congress of Industrial Organisations (AFL-CIO), however, in its latest move filed another petition to the United States Trade Representative (USTR) in October 2012 seeking Bangladesh's removal from the list of eligible beneficiary developing countries pursuant to Section 19 USC§2462 (d) of the GSP. The sector-specific accusations that the AFL-CIO put in substantiation of their petition are summed up along with our views at a later section of this paper.
Bangladesh in US-GSP review: On June 22, 2007, the AFL-CIO filed a petition before the USTR seeking Bangladesh's removal from the list of eligible beneficiary developing countries pursuant to 19 USC 2462 (d) of the GSP. In its submission to the USTR, the AFL-CIO stated that Bangladesh is not taking steps "to afford internationally recognised worker rights", including 1) the right of association, 2) the right to organise and bargain collectively, 3) freedom from compulsory labour, 4) minimum age for employing the children, and 5) acceptable conditions of work with respect to minimum wages, hours of work and occupational safety and health.
Since the filing of the petition, the Government of Bangladesh (GoB) gave its explanations in defence of retaining GSP at two rounds of hearings: one in mid-2007 and the other in early 2012. The USTR put the Bangladesh case on hold, first, until June 2009 and then until for another two years. After the last round of hearing on January 24, 2012, the USTR put the Bangladesh case on review along with some other candidate nations including Georgia, Niger, the Philippines, and Uzbekistan.
At the hearings, the Bangladesh delegation, led by commerce secretary, made issue-specific responses in the presence of the AFL-CIO representatives who sounded their earlier dissatisfaction over Bangladesh's progress in matters relating to workers' rights.
A gist of our responses: Right to association: Bangladesh government has established trade union registration system according to provisions set out in "Bangladesh Labour Act (BLA), 2006 which is absolutely transparent and faced no serious complaints from the workers and their associations. However, the present government in Bangladesh is in consultation with the workers and other important stakeholders to seek views if BLA requires any more clarity or modification. According to Ministry of Labour sources, until August 2010 there were 143 registered trade unions operating only in the export-oriented garment sectors. It also needs to be taken into consideration that because of dubious role of certain labour leaders a section of workers are reluctant to formally associate themselves with conflicting unions and pay membership fee (sometimes realised in a fashion of ransom) from their modest earnings.
Freedom from compulsory labour: When the AFL-CIO officials made this particular accusation against Bangladesh, apparently the government was taken by surprise. If by "compulsory labour" any indication is made to extra hours of work at the factories, it needs to be recorded that the workers are paid overtime allowances as per the existing wage rate. Bangladesh's human rights groups and civil society bodies are quite vigilant on labour issues. They carry out independent reports based on their own factory inspection and assessments. It is hardly possible to engage any factory workers in any form of "compulsory labour". Bangladesh's factory workers do quite frequently appear in the Western media. Also press and electronic media enjoy absolute freedom in Bangladesh. Development partners/countries, civil society organisations, global opinion leaders have time and again praised Bangladesh for its democratic credentials. With a free judiciary and trend of legal activism it is impractical to believe that incidence of irregularities such as compulsory labour would go unreported for an indefinite time.
Minimum wage for employing children: Bangladesh government remains absolutely committed to eliminating child labour. The government has been implementing a project named "Eliminating worst forms of child labour" to eliminate child labour from the leather sector. The National Child Labour Elimination Policy, 2010 would be equally applicable in both formal and informal sectors. Bangladesh Labour Act-2006 restricts employing children below 14 years of age in any work. The same Act also restricts employing children below 18 years of age in any forms of hazardous activities. Presently there is no child labour in RMG and shrimp processing units. The National Education Policy, 2010 aims to ensure compulsory and free primary education for every child up to the eighth grade (average age of 14 years). If this policy could be successfully implemented we can expect that child labour would be completely eliminated from Bangladesh in future. The Child Labour Unit (CLU) set up by the government has prepared a list of hazardous sector, occupations and activities which should never employ a child below the age of 18. CLU also runs an advocacy programme on protecting child rights.
Work condition, occupational safety: A look at the Government of Bangladesh's relevant legislations, policies and the development strategies would support the idea that Bangladesh government approaches the labour welfare more as a productivity and business development goal than any charity for the workers. The Government of Bangladesh firmly believes that labour welfare must factor in business competitiveness and that is something that could not be left just to the magnanimity of the factory owners. Bangladesh has enacted as many as 25 laws relating to protection of labour rights and promoting their welfare.
As a member of International Labour Organisation (ILO) and having ratified 33 ILO conventions, Bangladesh is pledge bound to adhere to ILO fundamental principles and rights at work. Bangladesh has ratified core ILO conventions: 29, 87,98, 150, 105, 111, 182 which protects, inter alia, the right of association, right to organise and bargain collectively, freedom from compulsory labour, minimum wage for employing children and ensure proper work conditions in regards to safety and security.
AFL-CIO's endless petitions: The facts still missing there: A historic development since filing of the GSP petition is the separation of Bangladesh's judiciary from the executive organ of the government. This development has significantly strengthened the workers' rights enforcement mechanism. While the government is responsible to ensure compliance with labour standards required to retain GSP benefit, Bangladesh seeks understanding of the US authorities that judiciary's independence has also limited the government's power to go for any drastic overhaul.
A. Governmental initiatives: The following brief account of governmental and industry level initiatives would speak of the utmost seriousness Bangladesh pays to advance labour
Legislation: The law called 'EPZ Workers' Associations and Industrial Relations Act' (2004) has been changed to 'EPZ Workers' Welfare Association and Industrial Relations Act' (2010) with a view to put more stress on welfare-related provisions. As per the directives of the law one hundred fifty one enterprises formed Workers' Welfare Associations (WWA) until December 2011. Bangladesh is in the process of implementing ILO Better Work programme which stands to improve labour compliance to the satisfaction of the global community.
Protecting workers' rights at Export Processing Zones (EPZs): In 2011, the Government of Bangladesh empowered existing labour courts and appellate tribunals (constituted under the 2007 Labour Act) to function as EPZ labour tribunal and appellate tribunal.
Minimum wage: In 2010, the minimum wages and other benefits of the EPZ workers were enhanced up to 93 per cent from the previously agreed wages. At the initiative of Prime Minister Sheikh Hasina, the workers' wage rate was enhanced five months earlier than previously declared time. It needs to be noted that the minimum wage is applicable only to the new recruits when they are still in their training period. Only a small segment of the workers receive the minimum wage salary.
Security and conducive environment: Industrial Police force has been operating since October 2010 to ensure workers' safety, security and protection from any form of harassment. Headquartered in Dhaka, the Industrial Police maintains four zonal offices in the divisional headquarters. In the successive budgets the government has enhanced allocation to make the Industrial Police more equipped. The activities of the two Task Forces-one on labour welfare and another on occupational and fire safety-have been revamped.
Fire safety: The government has initiated a high-level inter-ministerial committee, led by Director General, Fire Service and Civil Defence (FSCD), to make surprise inspection of factories. The inspection reports are circulated to the factory owners for necessary improvements, if need be. Reportedly, the roaming fire vigilance team closed down two factories in the outskirts of Dhaka after it noticed inadequate fire safety measures during inspection. Retired fire service officials have been hired by the Bangladesh Garment Manufacturers & Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) to conduct mandatory training for garments workers and regular fire drills. Since 1997 as until today 45 thousand garments workers have received training on fire safety issues.
Measures taken after the November 24, 2012 devastating fire: The fire at Tazreen Fashions on November 24, 2012 in which 112 workers were killed shocked the entire nation and must haunt it for a long time. Measures taken in the aftermath of the incident were directly supervised by the Prime Minister herself. With contributions from the Prime Minister's relief fund, Labour Ministry fund, Bangladesh Garment Manufacturers & Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA) and a supplier named Fuang Apparels, a total of BDT 6,00,000 (six hundred thousand Bangladesh taka) was handed over to the family of each deceased worker and BDT 50,000 (fifty thousand Bangladesh taka) to each injured worker. Insurance companies paid Taka 0.1 million to the family of each deceased worker. November 27 was declared a national mourning day.
For better treatment workers suffering burn injuries were treated at the top-notch local hospitals. Some of the injured workers were sent abroad for better treatment. The BGMEA has taken the responsibility of families that lost earning member in the fire for ten years from the date of fire to provide food, clothing, medicare and all daily needs. A plan is underway to appoint eligible injured workers in physically less demanding positions. The government is determined to take stern action against the people responsible for this tragic incident. Based on investigation reports two Tazreen executives have already been arrested for negligence in duty. Government wants to take this as an opportunity to improve the safety condition for succeeding generation of workers.
This is an updated and revised version of an earlier write-up by Akramul Qader, Ambassador of Bangladesh to the USA that appeared on January 17, 2013 in a national English daily
