The chief economist of Bangladesh Bank yesterday recommended that a separate fund be set up by high tariff-imposing countries like the US for upgrading factories in developing countries.
The fund, to be named “Tariffs for Standards”, could be administered by a third party such as the World Bank, said Hassan Zaman, chief economist of the central bank.
Zaman's comments came at a seminar of Saarc Finance, a group of governors and finance secretaries in South Asia.
The argument for this fund is strengthened by the fact that aid from the US to Bangladesh has only averaged $150 million in the last five years. By contrast, Bangladesh is contributing $850 million in export duty to the US Treasury.
Zaman's recommendation comes at a time when the government is bargaining with the US to cut the higher duty on Bangladeshi garment exports.
“Let us for now assume that for various reasons the $850 million or so of tariffs that Bangladesh pays the US to export our garments remains.”
“If so then why can't this $850 million, or even a portion of that, be placed by the US in a fund which finances factory upgrading and general improvement in working standards in Bangladesh?”
Zaman said he pitched the idea at a meeting of the Commonwealth countries and G20 representatives in Washington two weeks ago.
“But it needs even higher level advocacy and I suggest that this is an idea that the Saarc could take up with the likes of the G20.”
This type of fund has been set up for different initiatives in the past, he said, while citing the fund created by developed countries 15 years ago to reduce the external debt levels of low-income countries as an example.
“The issue of labour and factory standards is now as important as debt relief was back then.”