Visiting Dhaka on Wednesday, Michael J. Delaney, assistant U.S Trade Representative (USTR) for South and Central Asia, said that “an improved labor-rights climate will prove an integral part of a strong business climate” in Bangladesh. He also said labor reform is a key to Bangladesh regaining favorable status under the Generalized System of Preferences.
Speaking on the last leg of a five-day trip to Dhaka and Chittagong with an interagency delegation, Delaney said the aim was to meet with business, government and labor groups to prepare for the upcoming meeting of the Sustainability Compact. The compact is a multiparty commitment that includes the Bangladesh government, the European Union, and the International Labor Organization (ILO) and is expected to meet in November, in Dhaka.
Delaney explained that there was a great deal of overlap between the Sustainability Compact and GSP Action Plan, with the core issues being the removal of obstacles to union registration, eliminating unfair labor practices and the harassment of and violence against labor activists, worker safety issues, and improving labor laws and regulations — including in the country’s export processing zones.
But Bangladesh Commerce Minister Tofail Ahmed disagreed with Delaney, saying Wednesday that the government had fulfilled all the requirements needed to get GSP facilities back.
“I understand there is an assessment by some in Bangladesh that the Action Plan has already been fulfilled. I am certain this view is sincerely held. But the fact is that our own tracking of the items in the plan, as I have described today, indicates that more needs to be done,” Delaney said in his speech.
Bangladesh government officials have been working to get the U.S. to restore its GSP status, under which up to 5,000 products from beneficiary developing countries get duty-free access to the American market. In Bangladesh, a rule passed to implement the amendment of a labor law in 2013 just before the visit of the USTR-led delegation was widely seen as an important step by the government toward labor rights reform.
President Obama suspended Bangladesh from the GSP status in 2013, after finding that the country was not fully meeting the eligibility criteria with respect to worker rights.
“Some have suggested that that decision was somehow based on politics. On the contrary, it was a fact-based decision that followed a public, transparent, multiyear review of worker rights and worker safety in Bangladesh,” Delaney explained.
Some of the items he listed that were essential for progress included labor reform in the export processing zones (EPZ) in Bangladesh, where the freedom of association rules for labor don’t apply in the same way as they do elsewhere.
“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. 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,” Delaney said.
He also referred to the issue of union registrations, which grew dramatically after the labor law amendment was introduced in 2013. “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. We have also heard continuing concerns about the protection of unions from harassment. We want to work with the government to ensure that the Ministry of Labor has the capacity to address these allegations and to ensure unions’ rights and responsibilities under the law,” he said.
“I realize that there are some who may fear unions, who believe they hurt business, and who will resist these reforms. Yet there are examples of factory owners who are showing that working with unions can be part of a successful business strategy here in Bangladesh. In the end, having a healthy relationship with a union can strengthen a business and attract international buyers who track labor standards, which means it can be good for business,” he said.
Delaney added that there was also a need for transparency — ways the government can share what it is doing with the interested actors. “Building on the inspection database the government of Bangladesh has already put into place for safety, we seek similar leadership from the government in other labor areas, such as the publication of labor inspection reports online, and the publication of information by the government relating to unfair labor practice investigations and prosecutions — all of which are called for under the GSP Action Plan,” he said.
Delaney pointed out that the international community shared these concerns and that speaking more broadly, there was also an economic case for tackling worker rights and worker safety issues. He said that as the global market for ready-made goods becomes more and more competitive, international brands and retailers will have more options and will be increasingly reluctant to bear the reputational risk of sourcing from countries or factories that are not meeting international labor standards.
In addition, Bangladesh would be able to help the four million workers in the apparel sector stay on track toward achieving the middle-income status the country is trying to attain, he said.