EU warns of grave consequence if labour standards do not improve

Karel De Gucht

Karel De Gucht, European trade commissioner, yesterday warned Bangladesh of serious trade actions if labour rights and workplace safety are not improved substantially.
At present, Bangladesh among the least-developed nations enjoys duty-free and quota-free access to the European Union under the “Everything but Arms” scheme.
But after the twin industrial disasters of Tazreen fire and Rana Plaza collapse, the country’s claims to such benefits have become delicate. “I want to make it clear that Bangladesh cannot take for granted the trade preferences it currently enjoys,” the EU trade chief said in July.
Subsequently, the EU along with the International Labour Organisation on July 8 signed an agreement with the government which committed Bangladesh to time-bound actions for the improvement of labour rights, working conditions and factory safety.
De Gucht, at the time of signing the agreement, said the EU would consider appropriate action should there be no, or insufficient, progress for Bangladesh after a year—which he reiterated at a session on trade facilitation at the ninth World Trade Organisation Ministerial Conference in Bali.
“Everything should be put in place for continuation of duty-free facility to the EU. If nothing substantial is achieved, Bangladesh will have serious problems with the EU,” he said, while indicating that the implications will be more serious than the US’s suspension of generalised system of preferences (GSP) scheme.
Under the trade benefit scheme, 97 percent of the country’s products enjoyed duty-free access to the US. Garment, the country’s main export item, however, is excluded from the American GSP, but not from the EU scheme.
In other words, Bangladeshi garment exporters are subjected to 15.3 percent duty at the US market but nothing at the EU. Developing and developed countries, on the other hand, have to pay 12.5 percent duty for garment exports to the EU.
The European trade commissioner also touched upon the political situation in Bangladesh, adding that the EU is closely watching the transition of government.
Regarding De Gucht’s warning, Commerce Secretary Mahbub Ahmed said the country has been working on three fronts to improve the working conditions in garment factories.
For that end, other than the agreement with the EU and ILO, the country is also implementing the United States Trade Representative’s prescribed ‘action plan’ and has adopted the national action plan.
“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 labour rights and safety in working places.”
Ahmed, who is leading Bangladesh’s delegation in Bali, said there have been several “teleconferences with EU officials” in this regard, and they expressed satisfaction over the progress.
Bangladesh’s annual exports to the EU stand at around $14 billion.