Monday, July 15, 2024

US may strip Bangladesh of tariff breaks

The Obama administration may strip Bangladesh of import breaks following deadly accidents in the country’s textile industry, another sign of the pressure building on the southeast Asian nation to improve labour conditions, according to a report of the Washington Post.
The move was prompted partly by a fire late last year that killed 112 people and gained momentum after the recent factory collapse that claimed more than 1,100 lives.
Business, labour and advocacy groups are all struggling over how to respond to the April 24 incident — the worst-ever in the textile industry but an event that could produce meaningful change in a nation on its way to becoming the world’s largest garment exporter.
A group of mostly European nations has signed on to a binding inspection program. US firms such as Walmart have declined, but political backlash may be building. On Thursday, a group of senators wrote to major US retailers urging them to reconsider, and the Obama administration is also debating how to get American firms more constructively engaged.
Such agencies as the Department of Labour and the Office of the US Trade Representative, meanwhile, are stepping up their efforts. Labour officials have agreed to fund a programme to improve the Bangladeshi government’s currently weak — and some say corruption-ridden — 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 last fall to begin pressuring Bangladesh for improvement in its labour conditions, and the process intensified after the recent incidents.
Requests by labour groups to exclude Bangladesh from tariff breaks have been pending for several years, but USTR said in documents published in the federal register that ‘the lack of progress by the government of Bangladesh in addressing worker rights issues .?.?. warrants consideration of possible withdrawal’ of benefits.
That has gotten the government’s attention. A delegation of top Bangladeshi officials is in Washington this week lobbying to retain the tariff breaks and to convince US leaders in USTR, Labour and the State Department that they are serious about overhauling local labour laws, prosecuting crimes against labour leaders and making other long-sought changes.
The November fire and last month’s collapse of the Rana Plaza textile centre brought into sharp relief one of the core moral questions of globalisation: What obligation do the nations that benefit from low-cost goods made in places like Bangladesh have to ensure a safe environment and basic rights for workers?
The textile industry, historically, has been prone to problems. It is a sector that thrives on cheap labour and can easily decamp from one country to the next as buyers at such major firms as Target or Spain’s Zara chain seek the lowest-cost suppliers.
The expiration in 2005 of a worldwide quota system, in which developed nations like the US limited how much in textiles they would import, touched off a global explosion of investment in such places as Bangladesh, a densely populated nation with a per capita income of around $2,000 annually.
The country now relies on garment exports for about a fifth of its annual economic output. Complexes with hundreds of warehouse textile shops have sprung up under lax oversight, and a consortium of textile factory owners has developed into a potent political force.
In documents submitted to the USTR, the Bangladeshi government acknowledged its inability to cope, saying the expansion of the textile industry ‘has outstripped the pace of our progress’ in strengthening regulation.
The tariff breaks in question allow Bangladesh to export a wide variety of goods to the United States tax-free; last year that amounted to about $35 million. The breaks do not apply directly to Bangladesh’s textile industry, which sells in excess of $4.5 billion of goods to the United States each year.
But analysts say excluding Bangladesh from the Generalised System of Preferences, a nearly 40-year-old programme meant to encourage manufacturing in poor countries, would send one of the sharpest signals available — short of cutting off trade altogether or increasing tariffs directly on textiles.
The GSP facility covers only 0.54 per cent ($26 million) 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.
But the largest export earner garments factory owners are not that much worried as the Bangladeshi garments do not enjoy the GSP facilities while exporting apparels to US.
Advocacy groups generally argue against those stark measures, on the grounds that the brunt of the pain falls on workers left jobless by the disruption in trade.
‘Bangladesh doesn’t want to lose this for symbolic reasons,’ said Kimberly Elliott, a senior fellow at the Centre for Global Development. ‘Cutting off trade doesn’t help anything. They lose 3 to 4 million jobs mostly held by young women who would otherwise be working on farms or having kids as teenagers.’
Among changes the Bangladeshi government has promised to avoid sanctions: It has pledged to join an international programme credited with improving working conditions in such places as Cambodia — a step that labour advocates have urged for years as textile employment in Bangladesh surged.
The plight of workers in Bangladesh has long been a concern — starting with child labour revelations in the 1990s and through the more recent spate of fires and industrial accidents — said Raymond C Offenheiser, president of Oxfam America and a former Ford Foundation representative in Bangladesh.
But for all the problems, the textile industry has also drawn millions of young women into the labour force, allowed them to send money home to village families and has probably delayed childbearing and marriage from the early teens — a dramatic cultural shift in the predominantly Muslim nation.
‘It has benefitted women in a powerful way,’ Offenheiser said.

-With New Age input

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