Impact of the EPZ Labour Act 2019 on the US FDI

According to a 2016 European Commission Report, EPZs (Export Processing Zones) in Bangladesh employ roughly 400,000 workers who produce manufactured goods including garments and footwear. The newly enacted EPZ Labour Act 2019 (Act No. II of 2019) has made Trade Unions illegal, which violates ILO Convention No. 87 (Freedom of Association and Right to Organize) and ILO Convention No. 98 (Right to Organize and Collective Bargaining) both of which had been ratified by Bangladesh. The US Department of State's 2022 Investment Climate Statements Report on Bangladesh has emphasised the needs to reform the EPZ Labour law as one of many demands to allow Trade Unions in compliance with international labour standards to retain Bangladesh's access to the US GSP.

Even though the EPZ Labour Act 2019 has been enacted in compliance with the Bangladesh Labour (Amendment) Act (BLA) 2018, it still deviates from the BLA in two major aspects, namely the freedom of association including the right to form trade unions and the right to organise and collective bargaining. The newly adopted law is just a reflection of the Bangladesh EPZ Labour Bill 2016 which was similar to the EPZ Workers Welfare Association and Industrial Relations Act of 2010.

The Committee of Expert on the Application of Conventions and Recommendations (CEACR) of the International Labour Organization (ILO) had been critical about some of the provisions of the EPZ Act of 2010 for they being fell short of the ILO standards.

Similar to the draft Bill of 2016, sections 96-114 of the EPZ Labour Act 2019 allows "excessive interventions" by the authority in the formation of the Workers' Welfare Association (WWA) which has failed to act as a Collective Bargaining Agent (CBA). In fact, the Bill of 2016 had been drafted without consulting workers or labour rights advocates. Under the EPZ Labour Act 2019, the registration and formation process (section 97) of the WWA have been left mostly to the satisfaction of the Executive Chairman. The Executive Chairman may cancel the registration of the WWA anytime on certain grounds mentioned under section 109 of the 2019 Act. In 2016, the Solidarity Center analysed 70 cases from 2013 to 2016 in which authorities rejected registration applications for mundane reasons. Thus, the Executive Chairman can exercise his powers arbitrarily and in absence of trade unions, the WWA will fail to act as a CBA.

The Constitution of Bangladesh guarantees the right to form associations and unions. Bangladesh has also ratified ILO Convention No. 87 and 98. Therefore, it is an obligation for Bangladesh to make the national laws compatible with the ILO Conventions. The US State Department's 2022 Integrated Country Strategy (ICS) Report on Bangladesh has placed the improvement of labour standards as their second priority among the four priorities of the Dhaka Mission Chief. Thus, necessary amendments should be made to ensure freedom of association through legalising formation of trade unions inside and outside EPZs in order to improve the business climate and attract the US Foreign Direct Investment (FDI) in Bangladesh. This will also enable Bangladesh to enjoy the continued duty-free access of its exports to the European Markets under EU's Generalised System of Preference (GSP).

The Writer is a Student of Law, University of Dhaka.