EU-Bangladesh Apparel Trade: A Time for a Reality Check

On 5th February 2020, a multi-stakeholder event titled ‘EU-Bangladesh Apparel Trade: A Time for a Reality Check’ was held at the European Parliament in Brussels. All stakeholders had a chance to speak during the discussion. They described the progresses the sector has already made and explored ways it continues to ensure worker safety.

Bangladesh – Ready-Made Garment Manufacturing (RMG)

Bangladesh is the second largest ready-made garment (RMG) manufacturer after China both for the EU and across the world.  Bangladesh RMG accounts for more than 84% of their total overseas sales. In 2018-19, Bangladesh exported over $19.6 billion (€17,84 billion) of garment products to Europe. However, the EU has historically been sceptical about the working conditions and unsafe labour practices in Bangladesh.     

Managing Director, Shahriar Alam, the State Minister for Foreign Affairs stated; “the sector has had significantly contributed to Bangladesh’s economy, society and has helped the industry’s remarkable resilience and strength over nearly four decades, despite many challenges from both within and from outside.”

A German Member of the European Parliament (MEP) addressed the remaining challenges in the industry and facilitated an easy transition for Bangladesh from the LDC (Least Developed Country) status.  He mentioned the increase in imports of machinery and other materials from EU Member States supporting the growth of the Bangladesh RMG industry, whilst also benefiting the EU.

However, reports still continue to surface about poor worker safety and the Clean Clothes Campaign group noted ‘tens of thousands of workers’ went on strike in 2019 in a dispute over pay, resulting in violence, mass dismissals, blacklisting and an increased cost in production costs. However, Rubana Huq, the President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) quoted; “the RMG industry in Bangladesh is open for partnerships and has nothing to hide as far as workers’ protection and remedies are concerned.” Bangladesh is moving ahead responsibly, improving their factory safety, better worker rights and more environment-friendly factories. According to the BGMEA, more than 3,800 export-oriented garment factories have been inspected for building, fire and electrical safety.

Michael H. Poster, a professor at New York University’s Start School of Business, emphasised the need to examine the role of the international businesses to prevent the creation of exaggerated pressure. Several audience members at the event echoed his sentiment and emphasised the need to promote an incentive-based approach under EU regulations.

Bangladesh Power Development Board (BPDB) has proposed to raise the bulk tariff of electricity by 23.28% from 2020 and increase the minimum wage by 51%. Bangladesh RMG must ensure that a fair price of products is established to help sustain the RMG industry.

Trade

The EU works closely with Bangladesh who have been a member of the WTO (World Trade Organisation) since 1995 and as a developing country, they benefit from the EU’s ‘Everything but Arms’ arrangement, which grants duty free, quota free access for exporting all products except arms or ammunition.

  • The EU is Bangladesh’s main trading partner, accounted for around 24% of Bangladesh’s total trade in 2015.
  • In 2015, Bangladesh was the EU’s 35th largest trading partner in goods.
  • EU imports from Bangladesh are dominated by clothing, accounting for over 90% of the EU’s total imports of clothing.
  • EU exports to Bangladesh are dominated by machinery and transport equipment (49%).
  • From 2008 to 2015, imports from Bangladesh have almost trebled from €5.464 million to €15,145 million, which represents nearly half of Bangladesh’s total exports.

The EU has provided Bangladesh with a €113 million grant to pay three months of wages to one million workers who have lost their jobs due to COVID-19. Under the grant, a worker will receive Tk3,000 a month for June, July and August. The EU is also addressing many other areas to help with the recovery of the economy. Furthermore, the EU announced on 20th May that a further €334 million has been allocated to help fight the pandemic and that more funds may be mobilised in the near future.

Of the allocation, €263 million will help to mitigate the economic and social impacts of the pandemic, €93 million, alongside a separate €20 million grant from Germany, all of which will help the government to provide cash assistance to workers in the export-oriented industries adversely affected by the fallout of the pandemic.

To date, Global buyers and retailers have cancelled orders worth over $3 billion, leaving factory owners in a funding crisis forcing them to lay off workers.  These factories employed over one million workers, mostly women.

According to BGMEA, 46 factories have lost a total of 12,510 workers. But this number will continue to rise everyday as factories have started to cut down on costs in line with the drop-in orders. Also, global retailers have held back orders and delayed payments for already shipped goods because of the coronavirus outbreak. 

The Bangladesh government has announced a low rate loan package of Tk20,000 crore for the export-oriented industry to pay workers’ wages.

The Future

Whilst acknowledging the advances in factory safety, representatives of labour organisations have called for regulations that would enable garment workers to have a greater say in their working conditions.  The Covid-19 pandemic has significantly disrupted the RMG industry in Bangladesh and the EU is providing substantial financial support.  Yet, the improvements in worker safety and working conditions that have been achieved to date need to continue to be implemented as garment manufacturing starts to recover.

Rees from the International Labour Organisation stated; “Safety is not about buildings, it is about people. I am sure there are more things to be done to show that the workers understand and have the power to play their part for their safety at work and further measures should be taken to restrain interventions in the trade union elections.”

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https://www.just-style.com/news/bangladesh-hits-back-at-eu-negative-labour-narrative_id138076.aspx

https://tbsnews.net/bangladesh/dhaka-highlights-fair-prices-safety-sustainability-issues-brussels-rmg-42397

https://ec.europa.eu/trade/policy/countries-and-regions/countries/bangladesh/

https://www.dhakatribune.com/business/2020/06/02/eu-to-provide-97m-for-1m-rmg-workers-wages-for-3-months



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