GSP, TICFA and the compensation issue

It is really unbelievable that even after the horrible killings of more than 1100 workers in Rana Plaza, no significant initiative from the BGMEA or the government were seen that would address the long term restructuring of the fragile garments sector to earn credibility and ensure workers safety and security. More unbelievable is the fact that, even after two and half months have passed, no compensation for the families of the killed and injured has been declared, not to say the due payment of thousands of families living now in utter distress. The prime minister has handed over some money, collected through donation, to a few hundred families. That can be called preliminary help, not compensation, but that also stopped since June 19. Is the compensation issue forgotten or is it a deliberate attempt to waste time to bypass it?

On July 8, the International Labour Organization (ILO) along with European Union (EU) and the Government of Bangladesh declared a major “compact” to improve labour rights, working conditions and factory safety in the readymade garments industry in Bangladesh. They concluded with commitments from all the parties concerned to a ‘number of time-bound actions, including reforming the Bangladesh Labour Law to strengthening workers’ rights; improving building and fire safety by June 2014 and recruiting 200 additional inspectors by the end of 2013.’–en/index.htm

These are undoubtedly important and primary steps. The question is who prevented the government of Bangladesh and the BGMEA to take these initiatives on its own? Why did they have to wait to hear the ‘carrot or stick’ threat from the EU commissioner to declare some very preliminary steps? Till date the number of factory inspectors is pathetically insignificant, for about five thousand factories 10 effective inspectors is difficult to locate. The national budget was declared month; even the Rana Plaza disaster could not motivate the government to allocate funds to improve monitoring system and to strengthen institutions for efficient rescue operation.
On July 10, 17 North American retailers, including Wal-Mart and Gap formed ‘Alliance for Bangladesh Worker Safety Initiative’ undertook a five-year plan that set timelines and accountability for inspections, training and worker empowerment. It was said that the members of the alliance would provide the necessary funding over the five-year period — currently at $42 million and growing — to support the specific programmes of the initiative, with some companies offering an additional combined total of over $100 million in loans and access to capital to assist factory owners they work with in Bangladesh for factory safety improvements. (

These sound good. However, all depends on how the profiteers including owner, brand retailers and off course the government behave on the ground.

In the meanwhile, the Obama administration announced plans on June 27 to suspend ‘trade privileges’ for Bangladesh over ‘concerns about safety problems and labour rights violations’ in the country’s garment industry. It seems from the announcement that the US administration has always been very worried about safety of the workers and labour rights; therefore they are punishing the guilty owners by withdrawing some facilities so that they change their practice. But the question is, what trade privileges have been given to Bangladesh garments in the first place? Who will actually be affected the most by this punishment?

The partial answer can be found in the same report, ‘….the suspension (of GSP) would be largely symbolic because it will affect less than 1 percent of America’s $4.9 billion in annual imports from Bangladesh.’

Why? Simply because, Bangladesh garments have never been under the GSP facility. According to the US trade representative policy, not only the BD garments, garments in general mostly have been excluded from the GSP facility to protect their own factories. The one percent of value of the export items from Bangladesh to the US market covers ceramic, plastic, toys and other things. Ironically, the US administration does not have any complain against those, yet they are being punished by the US action. Things stand like this: the USA has ‘suspended’ the GSP facility to BD garments that it does not and never did provide in the first place. And it was done ‘over concerns about safety problems and labour rights violations’ Is it a joke or a planned psychological pressure to attain some other goal? As well for hiding the reality from its own citizens, may be to confuse them?

Now what will be the impact of this so-called GSP suspension? Nothing in terms of export flow, export of garments will continue with high rate of duties as before. However, one may fear one possibility though. A chain of blackmailing may take place, brand retailers and buying houses may push for further price cutting, the owners may continue cost cutting to maintain their level of profit, and all of these come down heavily on the workers, those who are still alive. If that happens, net result of the US ‘pro-labour’ punishment measure will end up in punishing the labourers more.

The GSP facility is not something from which only the LDCs get benefit, it provides benefits to the brands and the consumers in the West too. Bangladesh deserves it because of the WTO rules and global understandings regarding the LDCs. However, Bangladesh has not only been deprived of the GSP facility in the US, it is discriminated against by the US duty structure. When many other countries have a one percent tariff rate — some even less — as they enter the US market, Bangladesh garments sector faces 15% and more. This is a highly protectionist and discriminating policy of the US against Bangladesh.

Without asking the US to behave in line with the ‘free market’ principle that it claims to be the champion of, Bangladesh cabinet approved the TICFA draft on June 17 last as an attempt to please the US. In the public domain it was presented as a deal that would fight corruption, promote basic labour rights, and help to expand trade and investment. The historical experiences of close ties of the US empire with the worst possible corrupt and repressive rulers around the world suggest that the issues of corruption, environment and labour rights were put in the TICFA document as an ornamental, rhetorical manner very usual for the US. Expansion of trade and investment does not require TICFA, major trading partners do not have TICFA. The main interests of the US, therefore, lie elsewhere — ‘to drive Bangladesh towards enforcing intellectual property rights’ is one of them, ‘to open its service sector to US investors’ is another. And to bring Bangladesh into bilateral obligation avoiding multilateral forum like the WTO seems to be the most important objective. That would certainly give the US an effective instrument to twist hands and to take strategic steps whenever necessary.

We have heard foolish (or deceptive) statements from the government spokespersons or the BGMEA members that, if Bangladesh signs the TICFA, the country will get the GSP again!  That will never happen. In fact, Bangladesh does not need to beg for the GSP facility, it is meaningless. Bangladesh should demand to remove protectionist wall against its garments and remove discriminating tariff structure, instead of signing another agreement that would create more impediments for Bangladesh.
So far we have heard many promises, seen a number of international  conferences taking place. But talks about compensation for the killed and injured, and guidelines to protect the sector are still missing.