H.E’s remarks at the discussion organized by the Bipartisan Policy Center: June 7, 2013
I thank the Bipartisan Policy Center for inviting me to this discussion.
Fresh from my couple of weeks stay in Dhaka, I cannot expect a more comforting reconciliation with what you call a perfect jet-lag when I am greeted by so many of our friends together dwelling on a very critical case of my nation in DC. Presence of Senator Mitchell and Senator Snowe here today offers a wonderful opportunity for me in terms of profiting from interactions with visionary public servants who are still revered as unique example setters in respective fields. My salute to you, Senators!
The Apparel and Footwear Association, Retail Association, Retail Industry leaders and the Canadian Retail Association together represent what we must consider a historic partnership for Bangladesh. Their presence in our country not only helped us rise as a manufacturing hub in global apparels but also helped generate extremely valuable business ideas as to how millions of semi-skilled and unskilled people could be given an opportunity to work. Thanks for your business with us.
Bangladesh does not always make the headline news in your newspapers and TV channels. In fact, our 160 million people could comfortably be treated as a group inside which the least number of newsmakers are located. I don’t think the New York Times had always been quite generous to my political or commerce officer when she was on the lookout for some critical or funny stories based on the activities of a typical Bangladeshi: say a motor mechanic, or a hospital worker. No silly deed of your “unimaginative Ambassador” was just newsworthy in the last four years or so, save, a couple of fairly headquarter-driven rejoinders.
I do not want to discredit our journalist friends who have been covering the tragic factory collapse in the outskirts of Dhaka for the last one month and a half. I even heard of foreigners who for the first time came to know of the existence of any such country by the name of Bangladesh thanks to Savar that now ranks as the world’s worst manufacturing accident since the 1984 Bhopal gas leak in India causing 3787 deaths.
The Senate Foreign Relations Committee had a full hearing yesterday in which officials, business representatives and the AFL-CIO were testified with a view to figuring out the leverage that the US government should apply in order to bring Bangladesh’s garments sector into compliance. Senator Menendez’s caution that when the Western consumer groups would decide to stop buying cloths with a ‘made in Bangladesh’ sticker on the neck, not only Bangladesh will lose its badly needed factory jobs, any such en masse rejection would certainly create a dent in the retailer’s image. While I cannot imagine of an effective marketing strategy in a condition like that I am thankful to the Senator for his precious realization that no business can sustain until all stakeholders enjoy each other’s confidence and ,most importantly, own the entire process.
Bangladesh began exporting garments in the late 1970s. It is not the case that we have succeeded to address all the demand and supply side constraints in the last three decades. Bangladesh has virtually no presence in the high-end segment of apparels trade. It is a supplier of only the low cost products. In the global value chain of garments, Bangladesh’s business is still confined in the most toiling and least paid job of what producers briefly call CMT-cutting, making and trimming. The made-in-Bangladesh that Wal-Mart supplies to you at say $20, had a mark up of hardly one dollar and a half at the CMT phase. Unlike China, Bangladesh’s apparel sector is not embedded in an economically sound backward and forward linkages; meaning that a lion’s share of Bangladesh’s final earning actually pays import of fabrics and various accessories. Bangladesh still claims no share in the profits made at the distribution and marketing segments. For all practicality, we are the mere seamstresses of your low end clothes. In order to make a meaningful change in the factory condition the stakeholders located further down the supply chain must join hands.
It is a welcome development that this time the retailers have come up with some innovative ideas for a long-term improvement in factory conditions and labour rights. The accord on fire and building safety in Bangladesh that the European retailers signed on May 12, 2013 is first ever for any such agreement centering on compliance in Bangladesh’s garments. The issues that the accord cover include governance, inspection, remediation, training, transparency in reporting, dispute settlement and financial support. The Workers Rights Consortium estimates that a successful implementation of the agreement may require $ 3 billion over the next five years by the time Bangladesh’s garments export is likely to cross $100 billion mark. The UK Minister for International Development Mr. Alan Duncan has lately announced that his government plans to undertake a $27 million project to enhance skills of 100 thousand garment workers in the near future.
Among the US companies who have signed up are Abercrombie & Fitch and PVH Corp, the parent company of Calvin Klein. The leading US retailers such as Wal-Mart, Target and JC Penny are still not prepared to sign an international safety pact , reportedly out of a fear that such agreements may encourage labour groups and other aggrieved persons to sue them in the US courts. Gap, Bangladesh’s second highest retailer, says that it can sign the accord provided the language on arbitration is taken out. Surely an agreed stance among the retailers rather than a piecemeal approach would help Bangladesh facilitate and implement the agreements and undertake joint projects. Wal-Mart, however, plans to conduct its own factory inspections from coming August.
From our interaction with the US retailers, we have an understanding that the disadvantage, that they face vis-à-vis their European counterparts due to the high tariff barriers in the US market, has turned them relatively uncompetitive. A race towards the bottom to cover the anomalies created by differing tariff structures is not unusual. This is also one of the key reasons why the US retailers are not feeling confident to join the safety pact initiated by their European competitors. The US retailers view that, if the tariff barriers are removed, a portion of the additional profit could be invested in improving factory safety. I would like to suggest that the Bipartisan Policy Center can initiate a dialogue with their own retailers and examine the scope of extending support to Bangladesh’s long unmet demand for a duty free market access in the USA.
Our garments trade is not government controlled, yet improving conditions in garment factories is one of key challenges in the government’s everyday businesses. Garments workers represent over 90% of Bangladesh’s industrial labour force. It is obvious that any discussion on Bangladesh’s labour condition centers on the practices in one single sector which is garments.
To bring in the most urgent reforms in the country’s labour law and ensure a safe work environment, Prime Minister Sheikh Hasina, at the very early stage of her current administration initiated a dialogue with the multiple stakeholders at home and abroad. As a result the 2006 Labour Act has been amended comprehensively. All the amendments that were demanded by the ILO officials for undertaking the World Bank financed “Better Work Programme” have been done. Early last month a government-employers-workers tri-partite joint declaration was adopted in Dhaka in presence of a senior ILO official and ambassadors from all leading trading partner countries including the USA. This declaration binds the signatories to carry out a time-based action to strengthen inspection of the factories that produce export-oriented garments. Budgetary allocation has been made to appoint 200 factory inspectors soon.
Parallel initiatives have been taken by the Bangladesh Garment Manufacturing and Exporters Association (BGMEA) to bring their member factories into compliance. BGMEA has collected complete factory building inspection reports including load bearing calculation by professional engineer(s) from most of its members. The BGMEA has undertaken a random survey on 20% of its member factories to ascertain the accuracy of the submitted reports. The BGMEA expects to complete a review of the structural integrity and fire safety of buildings housing factories by November this year and take necessary remedial measures. The BGMEA has been developing a mega workers’ database across the industry. The US Embassy in Dhaka has been working with BRAC, Bangladesh’s leading NGO, to draw a pool of independent factory inspectors who would be working without any form of interference from any corner.
I think the final issue that I need to touch upon is less of what leverage the US administration enjoys in its dealing with Bangladesh than what it would eventually opt for. Because Bangladesh’s garments do not enjoy a duty free access in the US market, in terms of leverage, the tariff option is already more than exhausted. In case of a GSP suspension or partial withdrawal, ironically, the frontline sufferer would be some of the very insignificant exportables which are even not in the picture. However, the consequence could be unimaginably fatal if the other importing nations (including the EU countries) take a similar path. The difference between continuing Bangladesh’s GSP and not, in AFL-CIO’s view, is a choice between no-job and job that claims lives. Their understanding is that there is no business continuing Bangladesh’s GSP benefit as it has failed to live up to its past commitments. An effective option now to try, in their view, is a complete withdrawal of Bangladesh’s GSP.
I hope the Bipartisan Center agrees with me that when Bangladesh has been carrying out the most urgent reforms in its labour sector and factory compliance, a regressive measure can only make the condition worse. After a former US Secretary of State’s branding of Bangladesh as an “international basket case” in the early 1970s, whatever bright changes you notice there today are largely due to the hard work of its democracy loving millions. It is a transparent society where press, civil society, NGOs, labour groups and the opposition political groups enjoy absolute freedom. As many of your commentators have pointed out lately, garment workers may not be working under perfect conditions; however, the job they do is essentially not worse off than the alternatives: say, the job of a domestic aid or no job at all! We agree with AFL-CIO that even one corpse at the factory is too many. Same goes for one jobless girl who would otherwise look for clients under Dhaka’s traffic light or one single death due to inability to pay dowry or early marriage!
If you think that any benefit of doubt has been exhausted in six years of lacklustre performance, my humble submission would be that the wait is worth as long as the defaulter is seen limping not just sitting idle!
Thank you.