Sunday, September 15, 2013

Why Rushanara Ali's comment on US GSP removal was all wrong

In an otherwise uncontroversial performance at a press conference in Dhaka on Friday, 13 September, Rushanara Ali, the British Labour MP, and shadow international development minister made some misguided remarks about the decision of the United States government to suspend Bangladesh's trade benefits under what is known as the Generalized System of Preferences (GSP).

In an article titled, British party peeves over US's GSP cut, this is what one news website reported her as saying:
British Labour Party was ‘very disappointed’ over the US decision of suspending Bangladesh’s GSP facility after the worst-ever building collapse in April that killed more than 1100 people, mostly garment workers.
“....that sends wrong message. It suggests that they turn back on the industry rather than taking responsibility and fixing it, which should be the focus now,” visiting Bangladesh-born British MP Rushanara Ali said on Friday at a press conference.
Six MPs of the Britain-Bangladesh All Parliamentary Group is visiting Bangladesh to enquire the prevailing situation in garment sector following the building collapse. They will report back to the UK parliament.
The opposition MP suggested concerted efforts of all to improve safety of Bangladesh’s garment industry, which is the lifeblood of the country’s economy.
“We have to ensure the legacy of the people who lost their lives.... It’s not that this sector is worst and so should be damaged further. This sector should be improved and strengthened and that the issues like wages and the conditions inside the factories should be addressed by marshalling the resources of multinationals, international communities and the nation so that such disaster never happen again”.
She appreciated European Union’s roadmap after the factory collapse, but said the role of US was critical as it’s a major market for Bangladesh.
“We need to make sure there is a constructive response, not a destructive response for this industry”.
Turning back on the industry she said would be “damaging and depressing”
And in an article in a national paper, titled, 'British MPs slam US decision to suspend GSP', much the same is reported:
British Labour Party Spokesperson for International Trade Rushanara Ali has criticised the US for suspending the GSP facility for Bangladesh.
“We are very disappointed about the American decision, Congress’s decision,” she said at a press conference at a city hotel Friday also attended by another Labour Party lawmaker, Shabana Mahmood.
“That sends a wrong message. It suggests that they can turn their back on the industry rather than actually take responsibility and help to fix it,” Rushanara Ali said.
“The role of US is critical. It is a major market for this sector and we need to make sure that there is a constructive response not a destructive response.”
One should remember that the US only removed the GSP after over 100 workers were killed in the Tasreen fire in November 2012 and 1500 garment workers were killed when the Rana Plaza building collapsed in April this year.

Here are the reasons why she is wrong to make these remarks, and why arguably the European Union should be gaining much greater leverage on the Bangladesh government to obtain workplace improvements by playing hardball with the Bangladesh government and threatening to suspend its own GSP unless specific changes are made.

1. On a point of fact, the US GSP did not cover the Bangladesh garment sector, so its cancellation has no direct negative impact on this sector. In fact it covers a relatively small number of Bangladeshi exported products, so the direct economic impact on the country (yet along the Garment sector) will be minor. 

2. The US government has provided the Bangladesh government an action plan that sets out clearly what it must do to regain the GSP. It is a detailed action plan that can be seen here

3. One must assume that the Labour MP supports the implementation of the points set out in the action plan - improved safety enforcement, trade union rights etc etc. If so she should be supporting any kind of lever that actually forces the Bangladesh government to change the law and make improvement its regulatory systems. She should know that people within Bangladesh (and outside, including of course the US government) have been calling for these changes to happen for years and nothing has happened - and if Ali thinks that any Bangladesh government will now, all of a sudden, make these changes without having been seriously incentivised to do so, then she does not understand why the Tasreen fire or Rana Plaza happened in the first place

4. Lets be clear. The state regulatory safety system in Bangladesh is politically or financially corrupt, is basically broken. Governments over the years have done nothing to reform RAJUK (the Capital Development Authority), or the Inspectorate of Factories or the BGMEA (the exporters association) - three organisations crucial to ensuring the safety of the garment sector. As a result they barely fulfill their legal and mandated obligations.

5. The only reason why the Bangladesh government seems now concerned about complying with the issues set out in the US Action Plan is because the Bangladesh government desperately wants it bank. That is the simple fact of the case. It is sad that these kinds of improvements only happen when Bangladesh governments are forced into a corner, but that is the truth of the matter.

6. And whilst the EU/Bangladesh government compact is also positive - and in some ways reflects the US action plan - it could be much more effective if there was a clear threat from the EU that if the government fails to make particular changes in a set time frame, the EU would very seriously consider removing the GSP privileges.  This is what the Labour party spokesperson should have said, not criticising the US policy decision on GSP removal.

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