Dhaka, Bangladesh — Weeks after turbulent wage-hike protests and subsequent manufacturing facility closures, Bangladesh’s ready-made garment (RMG) trade, a key income earner for the nation, is coping with a brand new section of tension: “potential” financial sanctions by the nation’s Western companions.
The US and European Union collectively account for greater than 80 p.c of Bangladesh’s multibillion-dollar attire gross sales, and any sanction on the RMG trade would put a extreme dent in its already beleaguered economic system, mentioned analysts.
The specter of sanctions from the US arose as soon as Dhaka introduced January 7 for nationwide elections in what’s more likely to be one other seemingly one-sided vote.
These considerations had been additional boosted in early December when a key garment provider to the US was warned of sanctions in a letter of credit score (LC) from a overseas garment purchaser.
An LC is issued by monetary establishments or related events to ensure fee to sellers of products and companies after acceptable documentations are offered. It basically helps in avoiding danger by having intermediate purchaser and vendor banks that guarantee correct fee.
In response to the LC, a replica of which was obtained by Al Jazeera, the Western purchaser acknowledged: “We won’t course of transactions involving any nation, area or social gathering sanctioned by the UN, US, EU, UK. We’re not chargeable for any delay, non-performance or/ disclosure of knowledge for sanction-based causes.”
Ought to the clause kick in, the garment producer in Bangladesh would probably incur huge losses as the customer wouldn’t be liable to make any fee for the orders positioned with that attire producer.
Each trade leaders and authorities officers have dismissed the menace as a “hearsay” and “antigovernment” propaganda and say no such financial sanction might be imposed, particularly on the garment sector, as it’s a absolutely compliant trade and abides by all of the worldwide labour legal guidelines.
Faruqe Hassan, President of Bangladesh Clothes Producers and Exporters Affiliation (BGMEA) mentioned that the LC got here from a selected purchaser, and was not a statutory order or discover by “any particular nation or nations”.
“From BGMEA, we’ve got already contacted the customer and the difficulty was sorted out. It was only a cautionary clause inserted by the financial institution who ready the LC on behalf of the consumers,” Hassan advised Al Jazeera, “It doesn’t imply that any nation is planning to impose some sanctions on our trade.”
Behind the uneasiness
Hassan nonetheless admitted that many manufacturing facility house owners had expressed their considerations in a current BGMEA assembly over that LC clause and the “ongoing political turmoil of Bangladesh has given beginning to all kinds of speculations”.
Bangladesh’s nationwide election is due in lower than three weeks however a number of political unrests have disrupted the nation’s enterprise and economic system.
Bangladesh Nationalist Get together (BNP), the primary opposition social gathering, has boycotted the election amidst considerations of extreme ballot rigging. That units up the elections as a repeat of one-sided polls held in 2014, wherein Sheikh Hasina-led Awami League received 153 out of 300 parliamentary seats uncontested.
BNP says no free and truthful election is feasible underneath a partisan authorities and gave an instance of the 2018 ballot, wherein it took half. Impartial observers termed it a severely “rigged” election which noticed Awami League securing 288 out of 300 seats, a end result that The Washington Put up mentioned may solely be anticipated in a rustic like North Korea.
For the previous couple of months, opposition events have been staging protests on the streets to press house the demand of putting in a impartial election-time caretaker authorities.
The federal government has, since late October, used brute drive and court docket circumstances to suppress the protests. In November alone, greater than 10,000 BNP leaders and activists had been thrown in jail. None have acquired bail to this point.
Khondokar Golam Moazzem, analysis director of Bangladeshi assume tank Heart for Coverage Dialogue (CPD) advised Al Jazeera that the present political upheaval has clearly performed its position in propagating the widespread notion that Bangladesh’s RMG trade would possibly face an financial sanction.
The US has already taken a troublesome stance with a brand new visa coverage for Bangladesh in September wherein it mentioned it will impose a visa sanction on “people undermining the democratic election course of in Bangladesh”.
The warning word within the LC additionally got here at a time of extreme unrest within the RMG sector over minimal wage hikes wherein 4 employees died.
It additionally coincided with the introduction by the US, Bangladesh’s single largest garment purchaser, of the Presidential Memorandum on Advancing Employee Empowerment, Rights, and Excessive Labor Requirements Globally.
The memorandum is the Biden administration’s effort “to pursue a whole-of-government strategy to advancing employee empowerment and organizing, employees’ rights, and labor requirements globally”.
Whereas introducing the invoice, the US Secretary of State particularly talked about a firebrand garment labour activist in Bangladesh and mentioned: “We wish to be there for folks like Kalpona Akter, a Bangladeshi garment employee and activist, who says that she is alive immediately as a result of the US embassy advocated on her behalf.”
After the brand new US invoice, the Ministry of Commerce in Bangladesh acquired a letter from the Bangladesh embassy in Washington, DC wherein the embassy speculated that “Bangladesh could possibly be among the many nations focused by the brand new US Memorandum”.
Al Jazeera has seen the letter and Commerce Secretary Tapan Kanti Ghosh acknowledged its receipt and advised Al Jazeera that the Bangladesh authorities had already knowledgeable the US concerning the current steps that they had taken to guard labour rights in Bangladesh. “We’re very critical about labour rights and we’re the signatory of all of the ILO conventions.”
How critical are the sanction considerations?
Germany-based Bangladeshi monetary analyst Zia Hassan advised Al Jazeera that the prospect of US sanctions on Bangladesh’s garment trade can’t be dominated out.
“Historic patterns point out large visa sanctions are probably in retaliation for suspected election manipulation – a typical American response to alleged voting fraud globally,” he mentioned including that whereas the US doesn’t sometimes impose financial sanctions on grounds of a rustic’s politics alone, the potential garment commerce sanction may hinge on problems with employees’ rights.
“Denial of a good discount in wages negotiations, labour violations via threats, imprisonment and even homicide of vocal labour advocates may even see the US act on its warnings to sanction labour abuse,” he mentioned.
Labour rights activist Akter advised Al Jazeera that regardless that the employees had been again at work after the revision of the minimal wage hike, their calls for had not been met and the anger over injustice to the employees remains to be effervescent within the sector.
“Tons of of our employees had been thrown in jail for collaborating within the protests and they aren’t given bail as of now. The hike that was given is under no circumstances enough to combat the rising inflations. So the trade’s declare that the employees’ rights are protected shouldn’t be true,” she mentioned.
“Nevertheless, we clearly don’t need any sanction on this trade. Will probably be devastating not just for our employees but additionally for our economic system,” she added.