Bangladesh has every prospect to be the world's largest garment seller, but its exports to the US may land in deep trouble unless the government sincerely resolves a number of issues mostly relating to improving labour rights within this year.
Dan W Mozena, US ambassador to Bangladesh, made these remarks yesterday.
Cost escalation is driving buyers from China and investments are looking for new homes like Bangladesh. Now it is time the country grabbed the opportunity.
Mozena said four factors had gathered on the horizon, with power to have “a very magnified negative impact” on exports to the US, the largest market for Bangladesh.
“The US is trying to convey a clear understanding of the reality of the market in America for Bangladesh's readymade garments. That market is currently under threat due to a perfect storm,” the ambassador said during a discussion at The Daily Star office.
The latest of the factors is the unresolved murder of labour leader Aminul Islam, who worked for the Bangladesh Centre for Workers' Solidarity affiliated with the AFL-CIO, the umbrella American organisation for organised labour.
The Aminul murder is being seen by the US as reflecting a major escalation in the movement for greater labour rights, Mozena noted at the discussion during his courtesy visit to The Daily Star.
Editor Mahfuz Anam and senior journalists, including various department heads, were present on the occasion.
The other big factor, according to Mozena, is a pending petition from the AFL-CIO (American Federation of Labour and Congress of Industrial Organisations) against Bangladesh's having access to Generalised System of Preference (GSP), a duty-free privilege to the US.
According to the AFL-CIO, this petition has been driven on the basis of Bangladesh's failure to ensure workers basic labour rights. Pending since 2006/7, it is likely to come to a closure this year.
“Evolution of labour concerns in Bangladesh will of course impact [the closure],” Mozena said. “If it comes negatively for Bangladesh, that would be a powerful negative message for us about the Bangladesh market.”
The third factor that raises clouds over garment exports is Bangladesh's refusal to sign the Trade and Investment Cooperation Framework Agreement (Ticfa) that the US government has inked with many other countries.
“This is a very simple agreement with a one-point action item and that is to establish a forum to identify obstacles to increasing trade and investment and how to eliminate those obstacles,” the US envoy said.
It is into the fourth year of negotiation and it has not been signed.
“Why, I leave it to the government to explain because I cannot understand it,” he said.
The implication and perception regarding Dhaka's unwillingness to sign this agreement in Washington is that Bangladesh is trying to walk away from its international obligation to basic labour rights as stipulated in the international labour declaration, he stated.
On top of all this, big buyers are worried about safeguarding their own reputation and they will not risk that reputation by saving 10 cents through making a shirt in Bangladesh, he added.
“I met a top buyer in the USA who said he could import many times more from Bangladesh than what he is doing now only if the situation had improved.”
As the second largest apparel exporter in the world, Bangladesh was drawing more attention than before. “All these forces create a negative atmosphere,” he added.
But there are things that could be done, he said.
Most importantly, Bangladesh can cooperate with the ILO through the better work programme to bring together labour, owners and the government to a process leading to a situation where workers could freely and constructively associate and where the labour situation could be peaceful and positive.
This would build Bangladeshi brands as premium brands.
He pointed out that the ILO along with the US Department of Labour was assessing the situation in Bangladesh.
“Every buyer told me he wants to buy a premium product, meaning a fair trade product. Brand Bangladesh needs to be synonymous with fair trade and fair labour products,” he said.
“Many may say Bangladesh readymade garments do not benefit from GSP. But that is beside the point. The loss of GSP would send a tidal surge of negative coercing to American buyers… a very negative development for Bangladeshi brand. The positive outcome would be just the opposite.
The other issue of concern for Bangladesh-US relations is over Bangladesh's recent handling of the civil society.
“The gold standard for civil society in the world is Bangladesh. It's full of dynamism and creativity. The USA supports the civil society for Bangladesh's development. We talk about Brac, Grameen Bank or others for ensuring them space,” he said, drawing notice to the government move to review 53-54 affiliated bodies of the Grameen Bank through forming a commission. He hoped this review would be neutral and fair.
The Rohingya issue is another concern of the US. “Bangladesh has a long tradition of giving refuge to people driven out of their homeland. We want to see if that tradition is sustained,” he said.
Expressing concern about the political uncertainty over the next general elections, he said, “I hope the parties will agree at one point. This country is and will remain democratic…this agreement should be sooner than later.”
Explaining why political convergence was so important, he said due to the high cost of manufacturing in China, investors were now shifting to other countries, including Bangladesh.
“If they see political instability here, they will not come,” he said, adding that the earliest there was an agreement between the two parties, the earliest the country could benefit from this shifting investment.
He, however, said the relationship between the two countries should not be measured by one such issue as there were many other areas where development were positive for both countries.
He said the US-Bangladesh partnership was very positive and the two countries were working to root out violent extremism.
“Our relationship is excellent,” he insisted, referring to comments of Foreign Minister Dipu Moni and US Secretary of State Hillary Clinton.
The US is helping Bangladesh's law enforcers and coast guard to enhance its capacity to free its land border and sea of pirates, drug and arms smugglers and terrorists, and protect fish and sometime in future its gas resources.
He reiterated that Bangladesh strategically mattered to America because it was a moderate Muslim dominant country, tolerant and an alternative to violent extremism.
On a question about the Padma bridge project, Mozena said, “I'm very disappointed that the Bank chose to cancel the loan…the bridge is a good and crucial idea for infrastructure development. I hope ways can be found to revive the idea.”