Obama’s blunder with Bangladesh to suspend trade benefits

Angry clothing factory workers street protests for better pay and safe workplace

KEVIN RAFFERTY, special to the Japan Times

President Barack Obama recently announced that he was suspending Bangladesh’s trade benefits under the Generalized System of Preferences (GSP) because the country failed to give its workers proper rights.

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.

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 the biggest multinational companies in the world such as Wal-Mart, Primark, H&M, Marks and Spencer, Topshop.

Bangladesh factories suffered from several fires where workers could not get out because the exits were blocked. One fire last year killed 113 people. But the truly murderous culmination came in April when an eight-story factory, whose owners had ignored planning and construction regulations, suddenly collapsed like the proverbial pack of cards.

Police had warned about cracks, but the factory owners told worried workers that if they did not go to work they would lose their jobs: 1,129 of them lost their lives, and others survived only after crushed limbs were amputated. 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 the sledgehammer has missed its target. That’s a good thing because if Obama had succeeded in hurting Bangladesh, those he would have hurt most would have been the women who work sometimes in unsafe conditions of semi-slavery to produce garments for the world.

As Kimberley Elliott of the Center for Global Development noted, the U.S. action is in most ways a symbolic measure because GSP does not cover clothing, which accounts for 90 percent of Bangladesh’s exports to the United States.

The punishment affects about 1 percent of exports, or a trifling $35 million in 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 nevertheless 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 $12 billion worth of Bangladesh 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.

Already one chief executive of an American company that designs and distributes high-end apparel from Bangladesh told the New York Times, “Right now, the name of Bangladesh just gives a bad rep (reputation) 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 Caesarian 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 crisscrossed 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 heartwarming 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 $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 percent, is $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 (Brazil, Russia, India, China and South Africa) 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, which have begun to make their global presence felt.

Who could have imagined such Bangladeshi progress even 10 years ago?

But the women textile workers have achieved much more for their country. They have helped to change the social fabric, so that in key indicators such as life expectancy, infant mortality, the schooling of girls and combatting undernourishment of children, Bangladesh is now superior to its big neighbor, India.

Does Obama wish to bring his sledgehammer policies to crush their future and that of Bangladesh?

It would have been — would be — far better for Obama to use carrots before resorting to a stick. The U.K. government has shown a more enlightened attitude by asking leading companies buying goods from Bangladesh how they can work together to improve the standards of the factories. European retailers have also shown the right attitude — to try to make the working conditions safer and better for the women. But their U.S. counterparts walked away from any such deal, not wishing to get involved in legal obligations.

There is surely room for big international retailers to squeeze their profits to ensure safer production. Industry sources calculate that Bangladesh women get the lowest monthly pay of all the Asian women working in garment factories, a mere $37 for a 48-hour working week, against $120 in Cambodia, $145 in Vietnam, $300 in factories near Jakarta and $500 in Guangdong.

At the international level, where is World Bank President Jim Kim?

He has been quick to make grand statements about defeating poverty globally, but in this key area of actually doing something to protect vulnerable workers who are trying to raise themselves out of poverty, I cannot find a single word from Kim or the bank or indeed from the Asian Development Bank or from big international aid givers, apart from the United Kingdom.

Are they waiting for the Bangladesh government to ask for help to defeat its own corrupt part in allowing infringement of building codes that led to the rise and fall of unsafe factories and for protection of the politically connected factory owners who profit from slave labor and exploiting the women? Shame.

First published in Japan Times, July 23, 2013

Kevin Rafferty is a professor at the Institute for Academic Initiatives at Osaka University