Garment Trade Yields Power in Bangladesh- NYT

Credit- Taslima Akhtar for the New York Times
Credit- New York Times/ Taslima Akhtar

While developed countries debate regulations and trade impositions after the Rana Plaza collapse, Bangladesh needs to independently bolster reforms surrounding the garment industry. At present, the garment industry enjoys special privileges like subsidies and tax breaks and, they pay less tax as compared to other industries. Their factories, too, are not all build on legally obtained land, sometimes with environmentally detrimental consequences. The following New York Times article, reported by Jim Yardley, has the complete story.

Garment Trade Yields Power in Bangladesh 

DHAKA, Bangladesh — In the honking, congested heart of this overcrowded capital, one glass office tower stands uniquely alone, surrounded by water, accessible by a small bridge. It is a symbol of the power of Bangladesh’s garment industry, the headquarters of the country’s most powerful association of factory owners. It is also illegal.

So said the Bangladesh High Court, concluding that the land had been illegally obtained, the building had been erected without proper approvals and the location threatened a network of lakes that form the natural drainage system of the capital. The High Court called the building “a scam of abysmal proportions” and ordered it demolished within 90 days.

That was two years ago. The building still stands. The case is now in a legal limbo — more proof, according to critics, of the power of the Bangladesh Garment Manufacturers and Exporters Association. Members control the engine of the national economy — garment exports to the United States and Europe. Many serve in Parliament or own television stations and newspapers.

For two decades, as Bangladesh became a garment power, now trailing only China in global clothing exports, the trade group has often seemed more like a government ministry. Known as B.G.M.E.A., the organization helps regulate and administer exports and its leaders sit on high-level government committees on labor and security issues. Industry trade groups in the United States could only imagine such a role.

But the April collapse of the illegally constructed Rana Plaza factory building, which killed more than 1,100 people, has placed the entire global supply chain that delivers clothes from Bangladeshi factories to Western consumers under scrutiny. And the quasi-official garment group, in the eyes of its critics, presents a major conflict of interest at the center of Bangladesh’s troubles and is a big part of the systemic problems that have made the country a dangerous place for garment workers.

“You can’t put the fox in charge of the chickens,” said Rizwana Hasan, an environmental lawyer. “B.G.M.E.A. has no regulatory authority under the laws of the country. It’s a clubhouse of the garment industry.”

Bangladesh is working to restore the garment industry’s credibility after last month’s decision by the Obama administration to suspend a special trade preference for the country. The European Union is also considering penalties. Bangladesh has responded by passing new labor laws and pledging to inspect the structural safety and legal compliance of the nation’s 5,000 garment factories.

In both instances, the garment group’s interests were well represented. It has hired a team of engineers and is helping oversee the post-Rana Plaza factory inspections — even as the High Court cited the group for a litany of violations on its own headquarters. Meanwhile, the trade group brought its influence to bear in a lobbying campaign as Parliament amended the labor laws this month.

Bangladeshi officials promised to overhaul their labor laws, which fall short of standards defined by the International Labor Organization and tend to suppress unions, contributing to safety problems, labor advocates say. But the results of the overhaul were less significant, especially for the garment industry. One amendment required that industries create profit-sharing programs for workers. But exporting industries, notably the garment sector, were exempted.

Restrictions on labor organizing were eased, but far from fully lifted. The new law requires that 30 percent of factory workers must sign petitions to form a union, a telling obstacle given that many factories have thousands of employees and have few places to hold meetings and organize.

“Bangladesh had a golden opportunity,” said Roy Ramesh Chandra, a labor leader, who said that the political influence of factory owners diluted some of the amendments. “The employers have tremendous influence.”

Business interests dominate Bangladesh’s Parliament. Of its 300 members, an estimated 60 percent are involved in industry or business. Analysts say 31 members, or 10 percent of the country’s national legislators, directly own garment factories, while others have indirect financial interests in the industry.

Factory owners say their political clout is vastly overstated and dismiss suggestions that they exert influence over top elected leaders, and some analysts agree their influence is sometimes overstated. But the trade group clearly is part of the process in ways that set Bangladesh apart.

Three years ago, the prime minister created an industrial police force to maintain order in factory districts and act as an independent arbiter to solve disputes between workers and management. But many workers and labor organizers say the force almost always favors owners. The trade group is even supposed to buy patrol cars for officers.

“This organization is extremely powerful,” said one senior government official, who said much of its clout comes from political contributions. “The political parties are running after money.”

The trade group was formed in 1983 as Bangladesh, then one of the world’s poorest countries, was trying to build its economy by developing a garment industry. Initially, it had no headquarters and no bank account.

“When I first went out there, the B.G.M.E.A. was run out of a garage,” said Don Brasher, who worked as a trade consultant to Bangladesh for more than a decade. “It was not institutionalized at all.”

That quickly changed. Under the rules of global textiles, developing countries faced restrictions on garment exports and, in the case of the United States, were assigned trade quotas. Managing this quota system was critical and complicated. Bangladesh’s government decided to delegate administrative tasks to the trade group — including the authority to regulate certain transactions and collect fees.

“That was pretty extraordinary,” said Mr. Brasher, who lived in Dhaka for two years and worked closely with the group on the quota system. “Ordinarily, that is done by a government agency. There’s nothing like that, anywhere. But it was done out of necessity.”

Bangladesh’s government is notoriously corrupt and has limited bureaucratic capacity to handle the intricate mechanics of global trade. Politics is ferociously contested and marred by regular nationwide strikes, known as hartals. In this environment, the group became a stabilizing force as global trade rapidly grew.

Even after the quota system expired in 2005, the trade group steadily expanded its regulatory responsibilities. Today, it enjoys a near stranglehold on exports: only factories that are among its members are allowed to export woven garments, with some exceptions. The group regulates the importation of fabric and issues certificates of origin, the required proof that a garment is made in Bangladesh. It has arbitration committees to settle disputes and administers the often-complex practice of subcontracting.

On a recent evening, Atiqul Islam, the group’s president, sat at his desk and signed applications from factory owners seeking duty-free status to import machinery. A half-hour earlier, he had presided over a news conference about a skills training program for workers that the group had organized with the United Nations Development Program, the British international development agency UK-AID and the International Labor Organization.

“Zero power,” he said while signing the tax waiver applications, flicking away a question about the group’s influence. “The government decentralized a few things to us, so we are doing them. We can do it much faster.”

Many factory owners portray the industry as a public service, providing millions of jobs. The health of the garment sector is often seen as a national security issue, with the industry accounting for 80 percent of Bangladesh’s manufacturing exports and providing critical foreign exchange. It is the trade group that maintains order in daily operations of the industry, owners say.

“Otherwise, there would be chaos,” said Annisul Huq, a former president of the trade group. “Yes, we can criticize the B.G.M.E.A. But it has a very strong role. Somebody has to lead.”

Factory owners face many challenges in Bangladesh, including high interest rates on loans. But the heroic self-image of the sector is somewhat overstated. Garment factories enjoy subsidies and tax breaks not offered to other industries, and pay less tax. A recent study in a Bengali-language newspaper estimated that these subsidies and tax breaks exceeded tax revenues from the industry by roughly $17 million.

“The doors of the treasury are open for them,” said Badiul Alam Majumdar, secretary of the nonprofit group Citizens for Good Governance. “They extract all kinds of subsidies. They influence legislation. They influence the minimum wage. And because they are powerful, they can do, or undo, almost anything, with impunity.”

One unlikely critic of the trade group is Rubana Huq, the wife of Mr. Huq, who is now the managing director of the family’s garment conglomerate, Mohammadi Group. She said the garment industry in Bangladesh has matured and must be regulated by a transparent, independent arbiter, possibly a new government ministry.

“Of course, there is a conflict of interest,” she said. “There is no reason why a body like B.G.M.E.A. would be credible with the international players.”

Ms. Huq and other critics point to the headquarters building as a symbol of its protected status. Environmentalists have long protested and argued that the building’s location on a de facto island inside a city lake impedes the natural drainage network and contributes to flooding in the capital during the monsoon.

Illegalities abounded, according to the High Court ruling: construction started before the group had won final approval on a building plan; the land transfer from a government agency violated national laws on usage of public land. Yet the group’s leaders argue that the building’s status has been validated at the highest level: two prime ministers led different inauguration ceremonies at the site.

“It is not illegal,” said Mr. Huq, his voice rising. “We have applied to the government for the land. The government has given us the land. Two prime ministers have opened it. What validation do you want?”

But Iqbal Habib, an architect who designed the plan to renew the lake system, said the group could not be exempted from rules governing others. “They are always talking about their compliance with the buyers,” he said. “What about their compliance with the laws of the country?”

For now, the case is stalled. The Supreme Court is supposed to hold a final hearing, but with elections coming, the government has shown little interest in confronting the country’s most powerful industrial bloc. It is unclear if a hearing will take place.

“It has gone to the Supreme Court,” Mr. Huq said. “That could take forever. It is Bangladesh. We have full trust — as long as they give a verdict in our favor.”

He is smiling, joking, to a degree.

 

Julfikar Ali Manik contributed reporting.

 

Bangladesh Passes New Labor Laws – but Labor Rights Groups are Skeptical

Feeling the heat from international pressure, Bangladesh passed new labor laws to help improve worker rights and aid the formation of trade unions. But human rights groups say that law has only made “modest” improvements.

Source- Flickr Creative Commons/ Jankie
Source- Flickr Creative Commons/ Jankie

 

Steven Greenhouse from New York Times has the full article:

Under Pressure Bangladesh Adopts New Labor Law

Published: July 16, 2013- Facing intense international pressure to improve conditions for garment workers, Bangladeshi lawmakers amended the country’s labor law this week. But while the officials called the new law a landmark strengthening of workers’ protections, rights groups said the law made only modest changes and took numerous steps backward that undercut unions.

Bangladeshi lawmakers adopted the new law three weeks after the United States suspended Bangladesh’s trade preferences, saying that labor rights and safety violations were far too prevalent in that country’s factories. Moreover, the European Union has threatened to revoke Bangladesh’s trade privileges for similar reasons.

Speaking about the new law, Khandaker Mosharraf Hossain, the chairman of the parliamentary subcommittee on labor reforms, told Reuters: “The aim was to ensure workers’ rights are strengthened, and we have done that. I am hoping this will assuage global fears around this issue.”

The Bangladeshi government has faced fierce pressure to improve conditions for the nation’s four million garment workers since the Rana Plaza factory building collapsed in April, killing 1,129 workers.

Under the new law, factories will be required to set aside 5 percent of profits for a welfare fund for employees, although the law exempts export-oriented factories. Apparel is Bangladesh’s dominant industry, with $18 billion in annual exports, making it the world’s second-largest garment exporter after China.

As under the old law, workers hoping to form a union must gather signatures of 30 percent of a company’s workers — a level that was onerous, labor leaders said, because many apparel manufacturers have thousands of workers. To make unionizing easier, labor leaders were urging lawmakers to adopt a 10 percent threshold. In Bangladesh, several unions might represent employees in a single factory.

Business leaders complain that Bangladeshi unions are highly political and sometimes stage disruptive strikes as a complementary tactic to political blocs’ lobbying and infighting.

In a step that could help unionization, the new law bars the country’s labor ministry from giving factory owners the list of the 30 percent of workers who want to form a union. Labor leaders said that after receiving those lists, owners often fired union supporters or pressed many to withdraw their names from the petition, bringing the number below the requisite 30 percent mark for a union to be recognized.

Some labor leaders expressed concern that government officials would still give the names to factory owners, perhaps because of collusion or bribes.

“The government says this will make it easier for workers to organize,” said Babul Akhter, the president of the Bangladesh Garment and Industrial Workers Federation. “That’s not true.”

Mr. Akhter praised the legislation for adding some protections on fire and building safety: it strengthens requirements for permits when a factory adds floors.

Human Rights Watch said, however, that the new law would make unionizing harder. It criticized the legislation for adding more industrial sectors, including hospitals, where workers would not be permitted to form unions. The group noted that workers in Bangladesh’s important export processing zones would remain legally unable to unionize.

In addition, the government would be empowered to stop a strike if it would cause “serious hardship to the community” or be “prejudicial to the national interest.” And workers at any factory owned by foreigners or established in collaboration with foreigners would be barred from striking during the operation’s first three years.

“The Bangladesh government desperately wants to move the spotlight away from the Rana Plaza disaster, so it’s not surprising it is now trying to show that it belatedly cares about workers’ rights,” said Phil Robertson, deputy Asia director for Human Rights Watch. “This would be good news if the new law fully met international standards, but the sad reality is that the government has consciously limited basic workers’ rights while exposing workers to continued risks and exploitation.”

Under the new law, unions would need government approval before they could receive technical, health, safety or financial support from other countries.

An Obama administration official said various agencies were seeking to obtain the exact language of the new law in order to study it.

Roy Ramesh Chandra, a powerful Bangladeshi labor leader, said the legislation might not have done enough to persuade Europe not to suspend trade preferences or to get Washington to reinstate such preferences.

Jim Yardley contributed reporting.