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US Uses Trade Preferences to Help Bangladeshi Garment Workers

Bangladeshi Prime Minister Shiekh Hasina has not taken sufficient action to protect garment workers, 82% of whom are female, largely because of the powerful families who own the factories.

The Obama Administration suspended Bangladesh from its trade preferences on Thursday. The move is designed to pressure Prime Minister Sheikh Hasina to act meaningfully on previous promises to protect the country’s 4 million garment workers, of whom 82% are female. The US also hopes that the European Union will consider a similar tactic, removing the duty free privilege it gives Bangladesh for ready-made garments.

A New York Times editorial suggests that Sheikh Hasina’s efforts to produce safe conditions for garment workers have been insufficient because she hesitates to offend the powerful families who own the factories.  As a consequence, the Western manufacturers who produce ready made clothing for sale in the West, such as Primark and Walmart, have limited ability to enforce safety precautions and other protections for workers.

The General System of Preferences arrangement between the US and Bangladesh does not cover the garment industry, but instead gives duty free status to other exports, such as tobacco, china, and sporting equipment.  Thus, this move to suspend preferences will not cause lost work and other harm to the garment-manufacturing employees, but it is hoped will have an effect through the potential to discourage other foreign investment. In turn, since garment factory owners will be hindering other economic growth in Bangladesh, they may feel the disapproval of other local industries, as well as the financial sector, and the government make be spurred to take more effective action.

An even greater impact could occur if the European Union, which buys $12 billion in garments each year from Bangladesh (total Bangladeshi exports to the US are $5 billion), would suspend the duty-free arrangements it currently allows that country for ready-to-wear output. However, this action might directly cause layoffs within the garment industry, thus hurting the workers.

The United States’ policy changes comes in response to a petition by the AFL-CIO, a major union, asking the government to suspend Bangladesh preferences in order to effect changes for workers there.

In previous posts on this matter, I have disagreed with other Western commentators who, in the immediate aftermath of the two recent factory disasters in Dhaka, began calling for consumers in the UK and US to stop shopping at retailers who produce garments in Bangladesh. I felt that such opinions showed little understanding of the local situation and presented an ill-considered, apparently “easy fix.”  Instead, I suggested that the government in Bangladesh and the owners of local factories should be the focus of international pressure.  I also suggested that international groups, such as trade unions, consumer groups, and women’s organizations, could play a role in bringing international pressure to bear.  I cautioned that a consumer boycott of Bangladeshi garments would only result in worker redundancies and suggested that other means be sought. Therefore, I am very pleased with the steps taken by the Obama administration, as well with the initiative shown by the AFL-CIO.

While consumer power is an important tool, it is not always the most effective or appropriate tactic.  We need to learn not to turn to that solution as a default, but to consider other, more creative and unified methods.

Please also note that the garment workers are getting much more effective intervention via the global economy than they are from the government, even though Bangladesh has had a female prime minister (either Sheikh Hasina or Khaleda Zia) during most of the last 25 years.  So, another lesson here is that assuming female political leadership will solve gender problems is naive, while failing to develop sympathetic male leadership (such as Obama) is foolish.


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