Wednesday, August 7, 2013

Bangladesh - U.S. President suspends Bangladesh from preferential trade benefits program

by Tequila J. Brooks

            On June 27, 2013, the U.S. President suspended Bangladesh from participating in the General System of Preferences trade benefits program.  Suspension of benefits will go into effect 60 days after the announcement.

            The U.S. GSP program is designed to promote economic development and afford less developed countries duty-free access to U.S. markets for specified goods.  Among 127 designated beneficiary countries, Bangladesh is classified as one of the 44 least-developed beneficiaries (along with Afghanistan, Mali, Cambodia and others) for special treatment under the GSP program.  Under 19 USC § 2462(b)(2)(G), a country may be suspended from the program if it has not taken or is not taking steps to afford  internationally recognized workers rights within its territory - including in designated "export processing zones."

            Suspension of GSP benefits previously extended to Bangladesh occurred in the wake of the April 2013 building collapse at Rana Plaza in Dhaka which led to the deaths of 1,129 garment workers, but in fact was the culmination of a trade benefits review process that began almost exactly six years ago with a petition filed by the AFL-CIO.  The June 22, 2007 AFL-CIO GSP petition was the fifth labor petition to be filed against Bangladesh in the last 23 years, following petitions filed in 1990, 1999, 2004 and 2005. 

            The June 2007 petition alleged that Bangladesh failed to afford internationally recognized worker rights in export processing zones (EPZs, which have been recognized under Bangladeshi law since 1980) as well as in the ready-made garment and shrimp and fish processing industries.  Violations outlined in the petition included inadequate legal protections in and dilatory enforcement of a 2004 law governing the associational rights of workers in EPZs - including an executive decree denying workers under the age of 25 the right to hold union leadership positions despite the high participation of young workers in EPZs, improper calculation of workers' wages by employers and labor authorities and the failure to create legal institutions outlined in the law.  In the garment manufacturing sector, the AFL-CIO pointed to the failure of government authorities and employers to implement a 12-point tripartite agreement entered into in 2004 as the result of violence that erupted due to poor working conditions in the garment industry.  The tripartite agreement called for a higher minimum wage, written employment letters, timely pay, payment of unpaid wages and timely registration of trade union registration applications.  Noting the lack of regulations governing the shrimp and fish processing industry and the lack of an official minimum wage, the AFL-CIO pointed to the existence of debt bondage, "company stores," dangerous child labor, lack of documentation and payment of wages and overtime owed and widespread verbal and physical harassment of workers.

            The June 2007 petition also alleged that Bangladeshi police, army, intelligence and security forces actively violated the rights of trade union leaders and members through beatings, detention, deployment of the paramilitary Rapid Action Battalion (RAB) to force trade union leaders to resign from factories as well as utilization of Special Branch intelligence services to monitor the activities and members of trade unions and labor NGOs.

            As a result of the 2007 petition, the U.S. Trade Representative placed Bangladesh on "continuing review" status in September 2007 to monitor progress of improvements to labor law provisions and enforcement.  Hearings in which both the AFL-CIO and Bangladeshi authorities presented their points of view were held in October 2007, October 2009 and January 2012.  In April 2011, the AFL-CIO filed an update to its original June 2007 petition, noting that while the Bangladeshi minimum wage had been nominally increased, working conditions had in fact gotten worse in Bangladesh since the filing of the original petition.  The Bangladesh Center for Worker Solidarity (BCWS) had been de-registered by government authorities and BCWS leaders, including Aminul Islam (who was later murdered) had been arrested on baseless charges by national security and intelligence agents.  Building safety issues also plagued garment factories in Bangladesh.  The AFL-CIO pointed to factory fires in August 2009, February 2010, December 2010 and April 2011 that killed a total of almost 50 people including a firefighter, in addition to inadequate wage and social security benefit levels and ongoing lack of a legal infrastructure to resolve labor disputes in EPZs.  Observers estimate that over 500 workers were killed in fires in Bangladeshi factories between 2006 and 2012.  In November 2012, over 100 workers were killed in the Tazreen Fashions factory in Dhaka. In a March 2013 brief to the USTR, AFL-CIO listed over 40 factory fires that occurred in Bangladesh between November 2012 and March 2013.

             Legal procedures stemming from the 2007 AFL-CIO petition culminated in a hearing at USTR headquarters in Washington, DC on March 28, 2013, with Bangladeshi officials arguing that some progress had been made since 2007 and lobbying the Obama administration and U.S. Congress to maintain trade benefits under the GSP.  Less than 3 weeks later, 1,129 people died in the Rana Plaza building collapse.  In his press release on the decision to suspend GSP benefits to Bangladesh, recently-appointed USTR Michael Froman noted that the U.S. Department of Labor had provided and will continue to provide technical assistance to Bangladesh to improve its labor law framework and enforcement, as well as to improve factory building and fire safety.  

            While a quarter of Bangladesh's exports are destined for U.S. markets, the European Union is Bangladesh's leading trading partner.  Bangladesh is a participant in the EU's GSP program as well as that of the U.S.  According to the EU Trade Commissioner, 90% of Bangladesh's exports to the EU consist of clothing and knit products.  On July 8, 2013, the EU Trade Commissioner announced the launch of the Compact for Continuous Improvements in Labour Rights and Factory Safety in the Ready-Made Garment and Knitwear Industry in Bangladesh.  This Sustainability Compact was launched in partnership with the ILO and Bangladeshi social partners (government authorities, employer and trade union) and calls for reforms to Bangladesh's labor laws and recruitment of 200 additional safety inspectors by the end of 2013 as well as improvement of building and fire safety in garment factories by June 2014.  All efforts will be conducted with technical assistance and monitoring provided by the ILO.

            On July 19, 2013, the U.S. DOL, Department of State and USTR issued a joint press release outlining steps that the Government of Bangladesh must take in order to have its GSP benefits restored. These steps include development and improvement of labor, fire and building standards and improvement of trade union protections and administration in the garment and shrimp processing sectors and in EPZs.  In its press release, the Obama administration announced that it would cooperate with the EU and the ILO in their Sustainability compact for continued labor and safety improvements in the garment industry in Bangladesh. 

            In addition to actions taken by international, European and U.S. authorities, two competing multi-stakeholder/private fire and building safety initiatives came into existence in the wake of the Rana Plaza disaster.  The first is the May 13, 2013 Accord on Fire and Building Safety in Bangladesh which calls for safety inspections, remediation and fire safety training and credible safety inspections for Bangladeshi garment factories in member supply chains.  The Accord establishes a Steering Committee with an equal number of trade union and employer representatives (3 each) with a neutral chair chosen by the ILO.  The Accord also establishes dispute resolution and worker complaint mechanisms.  The majority of the company signatories to the Accord are European.  The other private mechanism is the Alliance for Bangladesh Worker Safety established on July 10, 2013 by a group of U.S. and Canadian companies led by Wal-Mart and The Gap.  The Alliance is supported by the American and Canadian Apparel and Footwear Associations and other industry organizations.  It has no trade union or worker participation in its governance structure but does contemplate unilateral donations from member companies.

- Technical Trade Proclamation to Congress Regarding Bangladesh by the President of the United States (June 27, 2013):
- USTR Press Release on President's Decision to Suspend GSP Benefits for Bangladesh (June 27, 2013):
- Statement by the U.S. Government on Labor Rights and Factory Safety in Bangladesh (July 19, 2013):
 - EU Trade Commissioner press release on Global Sustainability Compact in response to Bangladesh tragedy (July 8, 2013):
- Alliance for Bangladesh Worker Safety (July 10, 2013):
- US ‘will consider GSP revival for Bangladesh’ (BD News 24, July 10, 2013):