Dhaka, Bangladesh — Weeks after turbulent wage-hike protests and subsequent manufacturing unit closures, Bangladesh’s ready-made garment (RMG) business, a key income earner for the nation, is coping with a brand new part of tension: “doable” 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 business would put a extreme dent in its already beleaguered financial system, stated 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 issues have 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 international 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 primarily helps in avoiding danger by having intermediate purchaser and vendor banks that guarantee correct fee.
In line with the LC, a duplicate of which was obtained by Al Jazeera, the Western purchaser said: “We won’t course of transactions involving any nation, area or get together sanctioned by the UN, US, EU, UK. We aren’t chargeable for any delay, non-performance or/ disclosure of data for sanction-based causes.”
Ought to the clause kick in, the garment producer in Bangladesh would probably incur large losses as the client wouldn’t be liable to make any fee for the orders positioned with that attire producer.
Each business leaders and authorities officers have dismissed the risk as a “hearsay” and “antigovernment” propaganda and say no such financial sanction may be imposed, particularly on the garment sector, as it’s a absolutely compliant business and abides by all of the worldwide labour legal guidelines.
Faruqe Hassan, President of Bangladesh Clothes Producers and Exporters Affiliation (BGMEA) stated that the LC got here from a specific purchaser, and was not a statutory order or discover by “any particular nation or nations”.
“From BGMEA, we’ve already contacted the client 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 patrons,” Hassan informed Al Jazeera, “It doesn’t imply that any nation is planning to impose some sanctions on our business.”
Behind the uneasiness
Hassan nonetheless admitted that many manufacturing unit house owners had expressed their issues in a latest BGMEA assembly over that LC clause and the “ongoing political turmoil of Bangladesh has given delivery to all types 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 financial system.
Bangladesh Nationalist Get together (BNP), the primary opposition get together, has boycotted the election amidst issues of extreme ballot rigging. That units up the elections as a repeat of one-sided polls held in 2014, during which Sheikh Hasina-led Awami League gained 153 out of 300 parliamentary seats uncontested.
BNP says no free and honest election is feasible below a partisan authorities and gave an instance of the 2018 ballot, during which 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 Submit stated might 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 residence the demand of putting in a impartial election-time caretaker authorities.
The federal government has, since late October, used brute pressure and court docket circumstances to suppress the protests. In November alone, greater than 10,000 BNP leaders and activists have been thrown in jail. None have acquired bail to date.
Khondokar Golam Moazzem, analysis director of Bangladeshi suppose tank Middle for Coverage Dialogue (CPD) informed Al Jazeera that the present political upheaval has clearly performed its position in propagating the widespread notion that Bangladesh’s RMG business would possibly face an financial sanction.
The US has already taken a tricky stance with a brand new visa coverage for Bangladesh in September during which it stated it will impose a visa sanction on “people undermining the democratic election course of in Bangladesh”.
The warning observe within the LC additionally got here at a time of extreme unrest within the RMG sector over minimal wage hikes during which 4 staff 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, staff’ 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 stated: “We need to be there for individuals like Kalpona Akter, a Bangladeshi garment employee and activist, who says that she is alive as we speak 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 during which the embassy speculated that “Bangladesh might 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 informed Al Jazeera that the Bangladesh authorities had already knowledgeable the US in regards to the latest 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 issues?
Germany-based Bangladeshi monetary analyst Zia Hassan informed Al Jazeera that the prospect of US sanctions on Bangladesh’s garment business can’t be dominated out.
“Historic patterns point out extensive visa sanctions are probably in retaliation for suspected election manipulation – a typical American response to alleged voting fraud globally,” he stated including that whereas the US doesn’t sometimes impose financial sanctions on grounds of a rustic’s politics alone, the doable garment commerce sanction might hinge on problems with staff’ rights.
“Denial of a good discount in wages negotiations, labour violations by means of threats, imprisonment and even homicide of vocal labour advocates might even see the US act on its warnings to sanction labour abuse,” he stated.
Labour rights activist Akter informed Al Jazeera that despite the fact that the employees have 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 continues to be effervescent within the sector.
“Lots of of our staff have been thrown in jail for collaborating within the protests and they don’t seem to be given bail as of now. The hike that was given is by no means adequate to struggle the rising inflations. So the business’s declare that the employees’ rights are protected shouldn’t be true,” she stated.
“Nevertheless, we clearly don’t need any sanction on this business. Will probably be devastating not just for our staff but additionally for our financial system,” she added.
