Opinion | Can Bangladesh get prepared for EU's GSP-plus?
By Dr Khondaker Golam Moazzem, Research Director, Centre for Policy Dialogue (CPD) and Abeer Khandker, Senior Lecturer, East West University
Over the past few years, Bangladesh has progressed a lot in terms of economic and social development. However, graduation from the LDC group will be the most important milestone that Bangladesh could achieve in the coming years. But the question remains: is Bangladesh's trade sector ready to face the challenges after the country graduates from Least Developed Country (LDC) status in 2024? Losing preferential market access in many export destinations seems to be the most challenging aspect of the path of smooth graduation.
The European Union (EU) has been the biggest importer of Bangladesh, accounting for 58 per cent of the country's total exports and 64 per cent of the total apparel exports. (Source: European Union Trade Database, 2019). Bangladesh, as a Least Developed Country (LDC), has been enjoying zero tariff benefits from the best possible schemes available under the Generalised Scheme of Preferences of the European Union. Bangladesh has been one of the countries that have utilised the EU preferential market access. So, the continuation of tariff preference after LDC graduation is important for Bangladesh in all major markets, particularly in the EU market. Maintaining export competitiveness through preferential tariff would increase the country's exports. This would contribute to higher manufacturing, higher export earnings, higher employment, women empowerment, and ultimately, reduction of poverty.
Bangladesh's exports could face average duties of 8.7%
The 'zero duty' access to the EU will continue for three years after the official announcement of 'developing country'. If the preferences under EBA (Everything But Arms) are not available after that, the exports of Bangladesh would face 8.7 per cent duty on average. And it is estimated that shipments would drop at the rate of 5.7 per cent per year. To mitigate these effects, Bangladesh needs to qualify for the GSP+ scheme in order to preserve its competitiveness in the export market.
GSP+ scheme is a 'special incentive arrangement for Sustainable Development and Good Governance' for 'vulnerable developing countries'. This system grants full removal of tariffs on over 66 per cent of EU tariff lines. To qualify for the scheme, Bangladesh has to ratify 27 international conventions and has to fulfill the 'vulnerability' criteria as set by the European Union. In order to address these concerns, amendments of the existing labour laws, elimination of child labour, registration of trade unions, elimination of backlog in cases of labour laws etc have been given the most emphasis.
The government of Bangladesh, along with all the relevant stakeholders, has been active in addressing issues related to the international conventions for quite some time now. An indicative action plan for addressing all the issues has already been developed and has been shared with the European Union; however, it has been put on hold due to the pandemic. A tripartite committee has already been formed with six representatives from the government, three representatives from entrepreneurs, and three representatives from workers.
Various gaps in Bangladesh's Labour Law remain
The labour law, which originally came into force in 2006, has been substantially revised twice: once in 2013 and again in 2018; Bangladesh Labour Rules have also been formulated in 2015. The amendments included providing basic facilities like rest and lunchtime, establishing trade union rights, safety committees in factories, ensuring basic health and safety for workers, eliminating employment of children under twelve years of age etc; although full elimination of child labour is difficult in Bangladesh, given the socio-economic realities. Besides, the Labour Act does not cover the large number of domestic workers in Bangladesh, and child labour is one of the dominant forms in this area. Many of the terms are not clearly defined in the law. For example- one complaint from representatives of workers' organisations is that unions are allowed to select their leaders only from workers at the establishment which will enable employers to force out union leaders by firing them due to other reasons, such as 'unruly behaviour' (as cited in the law). But, the term 'unruly behaviour' has not been defined properly in the labour law. There are still various gaps in the law as well, such as the absence of clear definitions of harassment, forced labour, no defined provisions for workplace harassment, violence against workers etc. Elimination of child labour is difficult for Bangladesh. Moreover, there is no specific law against violence against workers in the workplace. Most of the incidents of violence against workers in Bangladesh have been workplace related. There are no direct links of punishments for harassment prescribed in the law, as the punishment only talks about 'ungentlemanly conduct', with no clear definition. The punishments in the labour law are minimal too. Major amendments/revisions include the elimination of provisions that allowed the employment of workers under the age of twelve and the establishment of an administrative process for trade union registration and labour inspection etc. The labour courts of Bangladesh have historically suffered from problems of backlogs, where cases take years to reach a proper verdict.
Trade union registration has been improving steadily; after the adoption of the Standard Operating Procedures (SOPs), the success rate in union registration has increased from 65 per cent in 2017 before the adoption of the SOPs to 79.85 per cent after their adoption, then 74.85 per cent in 2018, and 74 per cent up to July 2019. However, a large part of these trade unions are found to be non-functional.
Another major problem is the existence of EPZ laws that restrict the application of the labour law in the EPZ areas. There are restrictive provisions in the EPZ laws as well, such as section 109, which empowers the EPZ authority to cancel the registration of Workers' Welfare Associations (WWAs) if that association is involved in any kind of 'malpractice'. However, the term is not properly defined anywhere in the law.
Besides, the basic challenge for ratifying the Forced Labour Convention is the fact that the labour law of Bangladesh does not clearly address the forced labour issue, as there is no clear definition of forced labour in the law. The experts have come to a conclusion that the amendment in the labour laws should not only be done for the EU but for the betterment of the country.
Employers have invested in decent workplace environment
Bangladesh has made a lot of progress in terms of ensuring decent working conditions in factories, especially in the garments sector. Employers have invested a huge amount to ensure a decent workplace environment. Regulatory issues under different laws, acts, and rules have been amended and/or revised in order to ensure worker rights and decent working environments. Significant improvements in the institutional frameworks of the regulatory bodies have taken place over the years. There is still a lot to be done in terms of the implementation of the laws. These are: inclusion of workplace harassment issues in the legal framework, addressing the forced labour issue properly, addressing the concerns of the ILO committee of experts, and improvement of the overall monitoring and implementation framework of decent work.
The government of Bangladesh is, however, actively consulting with stakeholders about how to address these issues in a timely manner. Hopefully, there will be adequate improvements in the areas of decent work and the related legal framework so that Bangladesh can become eligible for the GSP+ scheme. A time-bound action plan with specific responsibilities for concerned public institutions is urgently required to set necessary changes in order. Furthermore, the necessary technical support needs to be extended by the development partners and international organisations in this regard.
This op-ed provides a summary of the key findings of the study titled "Prospect of EU's GSP+ for Bangladesh: Addressing challenges related to labour laws and rights" and was first published on The Financial Express: https://www.thefinancialexpress.com.bd/views/views/can-bangladesh-get-prepared-for-eus-gsp-plus-1612190630]. Views and opinions expressed in this article are those of the authors and do not necessarily reflect those of the GSP Hub.
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