ANALYSIS: Revisit EPZ law to sustain trade privileges to EU

There is no ignoring the contribution of the European Union's liberalised trade policy to Bangladesh's position as the second largest apparel exporter.

Evolving over three and a half decades, the $28.06 billion industry employs 4.4 million workers, a majority of whom are women from rural areas. Growth of the sector over the years has stirred up a transformation in the country's social, economic and business sectors, especially in women's empowerment.

As a member of the league of least developed countries (LDCs), Bangladesh is enjoying the zero duty benefit on export to the EU since 1971 under its very generous Everything But Arms (EBA) scheme.

Bangladesh is a strong player among the 49 LDCs that are eligible for a trade privilege to the EU, accounting for the highest rate at 65.7 percent EBA utlisation last year.

Bangladesh has become the second largest garment exporter defeating giants like India, Pakistan, Turkey and Vietnam, despite not having one of the major components of the trade -- raw cotton.

Such a feat was possible for the duty benefit, whereas competitors have to bear a 12.5 percent duty on export to this 28-nations trade bloc.

According to Export Promotion Bureau, Bangladesh exported goods worth $18.68 billion to the EU last fiscal year, which was 54.57 percent of total exports of $34.24 billion.

Of the amount, apparel accounted for $17.15 billion. The EU currently receives just over 62 percent of all Bangladesh's garment exports.

The EU recently sent a letter to the government threatening to temporarily suspend the trade privilege if labour rights are not improved, following a special paragraph of the ILO that was adopted in the ILO's International Labour Conference (ILC) in Geneva last year.

In the special paragraph, the ILO suggested four important factors -- amendment of the labour law relating to full freedom of association, freedom of association by the EPZ workers, investigation into anti-union discrimination and simplification of union registration.

The ILO adopted this paragraph upon observations during several visits of the ILO's expert committee members in Bangladesh in the last two years.

The EU threat came at a time when the country is redeeming itself after massive reforms following the Rana Plaza building collapse in April 2013.

A four member delegation led by Arne Lietz, a member of the European Parliament of the Socialists and Democrats Alliance, visited Bangladesh last week and suggested the same reforms.

At a press conference in Dhaka to mark the end of the visit, Lietz suggested Bangladesh improve labour conditions under the ILO provided special paragraph before mid June.

He expects progress by the third round of the Sustainability Compact meeting to be held on May 18 in Dhaka between the EU and Bangladesh.

After the Rana Plaza building collapse, Bangladesh hurriedly signed the Sustainability Compact with the EU in 2013, committing to responsible business behaviour and improvement of labour rights.

Bangladesh should mull the issue with seriousness as the EU is the most important trading partner and the garments sector is the country's economic lifeline.

In the meantime, exports to the UK, the third largest destination, have been faltering for Brexit.

Moreover, labour practices in Bangladesh would also be considered in allowing the GSP Plus benefit to Bangladesh once the country graduates to middle income status by the end of 2021.

Bangladesh saw the growth of a large band of entrepreneurs since the country's independence for the garment sector, where the EU played a vital role.

If the EU trade privilege continues, the local small and medium enterprises will become giants in future, as they will be able to be more competitive.

So, Bangladesh can revisit the draft act of EPZs that was finalised by the cabinet in February in 2016 for bringing a little change and simplification of freedom of association in the EPZs law.

Workers in the EPZs should be allowed to elect their representatives. The Department of Inspection for Factories and Establishments should also be allowed to inspect factories inside the EPZs.

The election of representatives in the Workers' Welfare Association in the EPZs should be free of gender bias as female workers should be given preference in election. The introduction of the widely practiced social dialogues can be in place to resolve labour disputes as well.

Bangladesh should hold a dialogue between the government, EU and ILO well ahead of the Sustainability Compact to resolve the crisis. It can take place under the Bangladesh – EU business climate umbrella.