If Bangladesh wants to retain positive trade relations with the European Union (EU), the country will have to get its labor and safety standards in order in a hurry.
Speaking on the sidelines at the Ninth World Trade Organization Ministerial Conference in Bali, Indonesia on December 4, EU Trade Commissioner Karel De Gucht warned Bangladesh of serious trade action that could be worse than the U.S. suspension of the country’s Generalized System of Preferences (GSP) status if Bangladesh doesn’t meet compliance quickly.
“Everything should be put in place for continuation of duty-free facility to the EU,” De Gucht said, adding that “If nothing substantial is achieved, Bangladesh will have serious problems with the EU,” according to Bangladesh’s The Daily Star.
In July, the EU, in partnership with the Bangladeshi government and the International Labour Organisation (ILO), launched a Global Sustainability Compact in response to the Tazreen and Rana Plaza tragedies in Bangladesh.
De Gucht convened a meeting in Geneva to discuss a plan of action to help Bangladesh avoid further deadly accidents by improving working conditions and factory safety in the ready-made garment (RMG) industry.
As part of the compact, all parties committed to reforming Bangladeshi labor laws to strengthen worker’s rights, specifically enabling the freedom of association, the right to collective bargaining, and improvements to occupational health and safety. Bangladesh was also to improve structural and fire safety in buildings with aid from the ILO to mobilize technical resources. To ensure that these upgrades were made and that RMG factories were in compliance with labor laws, 200 additional inspectors would be recruited to make regular factory visits.
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The ILO was to monitor the prompt implementation of rules and practices to achieve the aforementioned goals.
In a statement about the labor compact in July, De Gucht said, “I realize that this will be a challenging task for Bangladesh. I am fully aware of the need for Bangladesh to receive support. Let me be clear: The EU is ready to help.” He followed by saying, “I want to make it clear that Bangladesh – or for that matter any other Least Developed Country – cannot take for granted the trade preferences it currently enjoys.”
Bangladesh currently enjoys duty-free and quota-free access to EU markets for all exports but arms and ammunition under the “Everything But Arms” initiative, which the least developed country (LDC) has benefited from since 2001. But under that agreement, De Gucht said, the EU could consider appropriate action if no progress or insufficient progress was made for Bangladeshi workers.
The EU is Bangladesh’s main trading partner, accounting for roughly 12 percent of the country’s total trade. Clothing accounts for 90 percent of the EU’s total imports from Bangladesh. From 2008 to 2012, EU imports from Bangladesh increased 69 percent from €5.46 million ($7.5 million) to €9.2 million ($12.6 million), more than half of Bangladesh’s total exports, according to the European Commission.
To lose the most favorable “Everything But Arms” arrangement under EU’s GSP would be a detriment to the apparel and textile industry in Bangladesh, the country’s most significant sector.
According to The Daily Star, Bangladesh Commerce Secretary Mahbub Ahmed heeded De Gucht’s warning, saying the country has been working on improvements.
“We have already submitted progress reports to the US and the EU of the measures taken for improving the situation. We have made substantial advancement in labor rights and safety in working places,” Ahmed said, adding that EU officials expressed satisfaction with the country’s progress in teleconferences with Bangladeshi leaders.