What needs to BE DONE to get back GSP in the US market?
By Nurul Islam
The visit of Michael Delaney, Assistant US Trade Representative, in last month came at a time when the issue of getting back preferential trade benefits in the US market under GSP facility took a new turn. The Obama administration updated its eligible countries list for GSP facility in August, leaving Bangladesh out even after more than two years of suspending the privilege in 2013 amid factory safety and workers rights concerns.
The decision had little impact in terms of Bangladesh’s export to the US as the main product multi-billion dollar readymade garment never enjoyed the facility.
It, however, sent a negative signal across the world as the privilege was revoked on the ground of factory safety concerns following the worst-ever building collapse, Rana Plaza, in April 2013 that killed more than 1100 workers.
The new update frustrated the government. Commerce Minister Tofail Ahmed, who is always a critic to the US decision, venting his anger said: “I don’t support taking any steps for reviving the GSP facility. We’ve fulfilled our conditions. We’ve nothing more to do.” But days before Delaney’s arrival on September 19, the government issued the long pending implementation rules of the revised labor law. And then the government again claimed that all conditions have been fulfilled now under the 16 point action plan rolled out by the US authority after the GSP suspension. But Bangladesh, in fact, did not fulfill those conditions, was the clear message the US Trade Representative Delaney left before leaving Dhaka on September 23.
The Assistant Trade Representative at a lecture at the EMK Centre said they found an assessment by “some” in Bangladesh that the action plan had already been fulfilled. “But the fact is that our own tracking of the items in the plan indicates that more needs to be done.”
BANGLADESH ACTION PLAN 2013
The United States government encourages the government of Bangladesh to take significant actions to provide a basis for reinstating Bangladesh’s GSP benefits, including by implementing commitments under the Action plan by taking the following actions:
Government Inspections for Labor, Fire and Building Standards
• Develop, in consultation with the International Labor Organization (ILO), and implement in line with already agreed targets, a plan to increase the number of government labor, fire and building inspectors, improve their training, establish clear procedures for independent and credible inspections, and expand the resources at their disposal to conduct effective inspections in the readymade garment (RMG), knitwear, and shrimp sectors, including within Export Processing Zones (EPZs).
• Increase fines and other sanctions, including loss of import and export licenses, applied for failure to comply with labor, fire, or building standards to levels sufficient to deter future violations.
• Develop, in consultation with the ILO, and implement in line with already agreed targets, a plan to assess the structural building and fire safety of all active RMG/knitwear factories and initiate remedial actions, close or relocate inadequate factories, where appropriate.
• Create a publicly accessible database/matrix of all RMG/knitwear factories as a platform for reporting labor, fire, and building inspections, including information on the factories and locations, violations identified, fines and sanctions administered, factories closed or relocated, violations remediated, and the names of the lead inspectors.
• Establish directly or in consultation with civil society an effective complaint mechanism, including a hotline, for workers to confidentially and anonymously report fire, building safety, and worker rights violations.
Ready Made Garments (RMG)/Knitwear Sector
• Enact and implement, in consultation with the ILO, labor law reforms to address key concerns related to freedom of association and collective bargaining.
• Continue to expeditiously register unions that present applications that meet administrative requirements, and ensure protection of unions and their members from anti-union discrimination and reprisal.
• Publicly report information on the status and final outcomes of individual union registration applications, including the time taken to process the applications and the basis for denial if relevant, and information on collective bargaining agreements concluded.
• Register non-governmental labor organizations that meet administrative requirements, including the Bangladesh Center for Worker Solidarity (BCWS) and Social Activities for the Environment (SAFE). Drop or expeditiously resolve pending criminal charges against labor activists to ensure workers and their supporters do not face harassment or intimidation. Advance a transparent investigation into the murder of Aminul Islam and report on the findings of this investigation.
• Publicly report on the database/matrix identified above on anti-union discrimination or other unfair labor practice complaints received and labor inspections completed, including information on factories and locations, status of investigations, violations identified, fines and sanctions levied, remediation of violations, and the names of the lead inspectors.
• Develop and implement mechanisms, including a training program for industrial police officers who oversee the RMG sector on workers’ freedom of association and assembly, in coordination with the ILO, to prevent harassment, intimidation and violence against labor activists and unions.
Export Processing Zones (EPZ)
• Repeal or commit to a timeline for expeditiously bringing the EPZ law into conformity with international standards so that workers within EPZ factories enjoy the same freedom of association and collective bargaining rights as other workers in the country. Create a government-working group and begin the repeal or overhaul of the EPZ law, in coordination with the ILO.
• Issue regulations that, until the EPZ law has been repealed or overhauled, will ensure the protection of EPZ workers’ freedom of association, including by prohibiting “blacklisting” and other forms of exclusion from the zones for labor activities.
• Issue regulations that, until the EPZ law is repealed or overhauled, will ensure transparency in the enforcement of the existing EPZ law and that require the same inspection standards and procedures as in the rest of the RMG sector.
Shrimp Processing Sector
• Actively support ILO and other worker-employer initiatives in the shrimp sector, such as the March 2013 Memorandum of Agreement, to ensure the strengthening of freedom of association, including addressing anti-union discrimination and unfair labor practices.
• Publicly report on anti-union discrimination or other unfair labor practice complaints received and labor inspections completed, including information on factories and locations, status of investigations, violations identified, fines and sanctions levied, remediation of violations, and the names of the lead inspectors.
What was he trying to say?
“There has been a concrete improvement regarding workers safety. However, there are other elements of the action plan that must be addressed such as freedom of association, greater transparency with respect to unfair labor practices, and union registration both outsides and inside the EPZs. These are the areas where improvements must be made in order to fulfill the action plan,” Delaney made it clear.
He led an interagency US government delegation during the visit and had extensive meetings with business, government, and labor groups to prepare for the upcoming review meeting that the Sustainability Compact partners in November this year. The Compact was rolled out by the European Union of which the US was also a partner after the Rana Plaza disaster. The team also gathered information related to the factory safety and workers rights issues.
Delaney said the “US wants Bangladesh to succeed”, and that’s why provided a road map back to GSP status that laid out the specific steps that needed to be taken in order for GSP benefits to be restored.
He said anyone can read the GSP Action Plan and determine whether and to what degree action has been taken to resolve each issue. “Everything in the Action Plan is important, achievable, and transparent,” he maintained.
The US has conducted three separate reviews since June 2013 of Bangladesh’s progress on the Action Plan. These reviews acknowledged that progress had been made on a number of the action items. For example, the Ministry of Labor has substantially increased the number of labor inspectors and more than 2000 clothing factories have been inspected by the two private sector-led initiatives, the Alliance and the Accord. But there is still “important work to be done”, Delaney said. “Inspections of remaining RMG factories, including many operated by subcontractors to RMG-exporting firms, still need to be conducted”.
Freedom of Association in the EPZs is “a very significant” element of both the GSP Action Plan and the Sustainability Compact. “This is an issue on which we have been discussing with the government of Bangladesh for many years under the GSP program,” he said.
Efforts to harmonize the law in the EPZs with international standards on freedom of association or collective bargaining will help achieve another GSP element. Ensuring workers’ have a voice, regardless of whether they work inside or outside an EPZ, will be key. “We saw very good progress initially on union registrations, with an unprecedented number of unions successfully registering. Now however, there seems to be slowing in this area, with an increasing number of union registrations being denied”. In addition, Delaney said, the US sought transparency — ways the government can share what it is doing with the interested actors.
The core issues that underlie the GSP review and the Sustainability Compact are removing obstacles to union registration, eliminating unfair labor practices and the harassment of and violence against labor activists, worker safety issues, and improving labor law and regulations – including with respect the EPZs.
He said there were examples of factory owners who were showing that working with unions can be part of “a successful business” strategy here in Bangladesh, allying fears of factory owners that unions can ruin their businesses. “These reforms are rightfully key components to an effective development strategy,” he said.
Launched in 1976, the GSP program promotes economic growth and sustainable development by providing duty-free access to the US market for up to 5,000 products from beneficiary developing countries. Countries must meet certain eligibility criteria in order to participate. “These criteria are transparent and applied equally to all countries,” Delaney said. He said President Obama revoked Bangladesh’s GSP after six years of “intensive public review and engagement” with the government of Bangladesh.
Some have suggested that that decision was somehow based on politics. But Delaney said it was a “fact-based decision that followed a public, transparent, multi-year review of worker rights and worker safety in Bangladesh”. He, however, said Bangladesh-US economic partnership can grow under the Trade and Investment Cooperation Framework Agreement (TICFA), outside the context of GSP.
Dhaka-Washington singed Ticfa in November 2013, under which countries can discuss mutual interests in trade, raise concerns, and resolve them. But Delaney said Bangladesh can sustain the growth in its clothing exports and move up to higher value-added segments of the RMG sector, by completing the remaining elements of the GSP Action Plan.
The RMG sector has driven Bangladesh’s remarkable development over the last 20 years. Only time can tell how this whole GSP story will turn in the end, for better or worse of Bangladesh’s RMG sector.