Bangladesh garment industry

US blundering in Bangladesh

Barack Obama's suspension of Bangladesh's trade benefits after a series of factory disasters risks encouraging others to inflict harsher punishments

PUBLISHED : Wednesday, 10 July, 2013, 12:00am
UPDATED : Wednesday, 10 July, 2013, 4:38am

Not for the first time, I have to wonder at the clumsiness and the lack of sensible, let alone sensitive, policies by the administration of President Barack Obama. Last month the US announced what was supposed to be an important suspension of Bangladesh's trade benefits because the country was failing to protect the rights of its workers.

No doubt he was inspired by horror and outrage after the deaths of almost 1,500 workers in a series of criminal accidents in Bangladesh's factories making garments for multinational companies, household names like Wal-Mart, Primark, H&M, Marks and Spencer, and Topshop.

There were fires where workers could not get out because the exits were blocked. But the truly murderous culmination came in April when a supposedly five-storey factory that had grown to eight because its owners ignored planning and construction regulations suddenly collapsed like the proverbial pack of cards.

Police had warned about the cracks, but the factory owners warned workers that if they did not go to work they would lose their jobs: instead, 1,129 of them lost their lives and others only survived after their crushed limbs were amputated as they were trapped in the rubble. It was the world's biggest factory disaster.

The punishment that Obama has imposed is like an old-fashioned sledgehammer to crack the proverbial nut - but one that has missed its target. That is a good thing because if Obama had succeeded in hurting Bangladesh, the people he would have hurt most would have been the women who work sometimes in unsafe conditions of semi-slavery producing garments.

Obama announced the suspension of Bangladesh's trade benefits under the Generalised System of Preferences (GSP). As Kimberly Elliott of the Centre for Global Development noted, this is in most ways a symbolic measure because GSP does not cover clothing, which accounts for 90 per cent of Bangladesh's exports to the US.

The punishment affects about 1 per cent of exports, or a mere US$35 million of goods, so it seems a clumsy way of making a point. It may be that Obama understood that what he was doing would have very little impact on the economy but wanted to send a warning shot. But the way he did it smacks of bullying.

It also sends dangerous messages in different directions. It might encourage the European Union to follow suit, which would threaten more than US$12 billion worth of Bangladeshi goods. Washington's action could also encourage big retailers to rethink and try to pull out of Bangladesh because Obama has withdrawn a significant seal of approval from the country.

One chief executive of an American firm which designs and distributes high-end apparel from Bangladesh told The New York Times, "Right now, the name of Bangladesh just gives a bad rep to a company." A number of international companies are keen to explore other opportunities away from disgraced Bangladesh.

I have to declare an interest. I watched the creation of Bangladesh and its bloody caesarean birth out of Pakistan with India as midwife. Even in the heady days of independence, the economic plight of Bangladesh seemed desperate, with few exports but heavy dependence on imports for all sort of basic goods, from food to energy and clothing.

Worse still, the life expectancy and literacy rates of the infant country were among the lowest in the world. The land was criss-crossed by rivers curling round each other like snakes in an orgy. The main means of transport were country boats with home-made patched up sails that had to be pulled if there was no wind, or slow buses or slower trains, all of which were usually so crowded that there was no room to stand, even on the roof.

What was the hope for this country, except for the heart-warming energy and enthusiasm of the people?

To cut a long story short, Bangladesh, after a painful start, has begun to make important steps forward, thanks largely to the women in the textile factories.

They are the backbone of the US$20 billion in clothing exports that have helped Bangladesh to climb up the world economic tables. Per capita income, thanks to annual growth of 6 to 7 per cent, is US$1,700 and Bangladesh now occupies 44th place in the global economic league tables.

It has gained a place in Goldman Sachs' N-11 group of countries, meaning the Next Eleven, which have the potential after the BRICS bloc to become the big movers and shakers of the world economy in this century.

The list is an odd one, with some doubtful names on it, but it puts Bangladesh in the august company of Mexico, Indonesia, South Korea and Turkey (the MIKT in an anagram-crazy world), which have begun to make their global presence felt. Who could have imagined such Bangladeshi progress even 10 years ago?