It emerged this week that eight US Members of Congress, all belonging to the House of Representatives, the lower chamber, have written to a leading apparel industry trade group to demand its support for the Bangladeshi garment industry workers' demand for higher wages.

They said the authorities' reluctance to support a living wage of Tk 23,000 per month, which is what the workers were demanding, is not only disheartening but also shameful.

The Congress members said this in a letter to Stephen Lamar, president and CEO of American Apparel and Footwear Association (AAFA) dated December 15. It is useful to note that the signatories were all members of the Democrat party, and include some of its rising stars such as Ilhan Omar and Alexandria Ocasio-Cortez. Omar's office in fact led the effort.

"We are writing to urge the American Apparel and Footwear Association (AAFA) to strongly support the demands of Bangladesh's garment workers for fairer wages. Due to their significant presence and operational leverage in Bangladesh, we believe that AAFA member companies are strongly positioned to support workers' petitions for livable wages and to vocally champion their labour rights in a key country for the global apparel industry," the Congress members wrote.

The US Congress members said, "The recent wage increases announced by Bangladesh's wage board, which would not even meet the rising cost of living, have led to extended mass protests. Police have responded with violence against protesters and trade union leaders, resulting in at least four deaths, numerous injuries, and a wave of unjust arrests, detentions, and indefinite factory shutdowns."

The Congress members made 8 specific demands of the AAFA:

i) Call for an immediate end to the violence perpetrated by police and other security forces against workers.

ii) Pressure the government and garment manufacturers of Bangladesh to improve the wage setting process and accept workers' minimum demand of $208 per month to align with the real cost of living.

iii) Commit to maintaining a long-term sourcing relationship with your suppliers and to increasing your purchasing prices to fully absorb the additional labour costs;

iv)Foster transparency and accountability in the business operations and supply chains of member companies to safeguard labour and human rights, including the right to freedom of association;

v) To instruct suppliers to promptly withdraw or to dismiss any false criminal cases filed against workers and union leaders;

vi) To warn suppliers to stop filing criminal cases against workers, and make clear that the dismissal, blacklisting, or other harassment of workers and union leaders is unacceptable and will influence sourcing decisions.

vii) To call on Bangladeshi authorities to stop arresting workers and union leaders in response to wage protests and to immediately release innocent detained individuals.

viii) To use your considerable leverage with individual factory owners and industry associations to ensure that workers are paid in spite of recent factory closures.

The Congress members in the letter also wrote, "Brands with factories in the Export Processing Zones (EPZ) sector should note that EPZs have their own Minimum Wage Board, which has just recently been constituted. Brand engagement can play a critical role in ensuring that the EPZ wage setting process does not follow the same disastrous and unfair path as in the garment sector outside the zones. There is still a chance for a better outcome that will not trap EPZ workers in poverty for another 5 years."

"We urge you to help stop the exploitation against the Bangladeshi workers who have fueled the growth and profit of your businesses, and in support of the democratic, inclusive values that we cherish as a nation," added the letter.

The Congress members who signed the letter are: Ilhan Omar, James P McGovern, Jan Schakowsky, Raúl M Grijalva, Barbara Lee, David J Trone, Alexandria Ocasio-Cortez and Susan Wild.

The letter came in the context of the government fixed the minimum wage for readymade garment workers at Tk 12,500 on November 7, in compliance with the proposal made by factory owners. The workers were demanding Tk 25,000, later brought down to Tk 23,000. The protests around the new wage demand saw violent clashes break out that left at least four workers dead, and hundreds losing their jobs.

Given the current climate in relations between Washington and Dhaka, where there are some serious disagreements over the way in which the upcoming parliamentary elections are going to be held in Bangladesh without the participation of its main opposition party, the BNP, this almost inevitably prompted talk of the letter laying the groundwork for a sanctions regime for Bangladesh in the days ahead.

Not so fast

The USA is one of Bangladesh's major garment export markets. According to recent data from OTEXA, the USA imported $9.75 billion worth of apparel from Bangladesh in 2022.

The recent geopolitical developments have raised fears among trade experts and exporters that exports to the USA - one of the country's largest apparel export markets - could be adversely affected. As a result, a significant portion of orders may shift to other countries.

However, BKMEA Vice President, Fazlee Shamim Ehsan, told Textiles Today, a trade publication: "There is a fear of various types of tariff barriers could be imposed on the export products of Bangladesh. Strict compliance conditions may be imposed too. But so far, US buyers have not expressed any concerns or worries about it."

In recent years, Bangladesh's garment exports to the US have been on the upswing despite the lack of tariff benefits. But in the period of January to August 2023, RMG exports to the USA declined by 21.77%, totaling $5.18 billion, down from $6.63 billion during the same period in 2022, according to OTEXA data.

In this context - BGMEA President, Faruque Hassan is unwilling to accept that the purchase orders have decreased due to geo-political tensions.

BGMEA President told Textiles Today: "Due to geo-political tension, we hope that the US government will not take any action against the business and trade, that is, the workers and common people of this country. We are taking various steps on behalf of BGMEA to maintain and develop commercial relations with the USA."

Faruque Hassan said, "In the first quarter of this year, apparel exports to the USA from around the world decreased by 19% in terms of value and 30% in terms of size."

He further said, "Due to high inflation, the USA has reduced the import of garments from all countries. But we are expecting that our exports will be normal by December."

Faruque Hassan hits on an important point there, that any sanctions would affect the 4 million workers of the industry as well. Bangladesh's garment industry is an attractive sourcing hub for fashion buyers from the USA, Europe and other countries. The main reasons are the relatively low cost, reliability and easy labour availability.

The USA imports nearly $100 billion worth of RMG annually, of which Bangladesh accounts for 9.8%. This means that 10 percent of garments imported into the United States comes from Bangladesh.

The country's strong performance in the US fashion sector has been attributed by apparel exporters to its ability to quickly adapt to consumer demands and trends.

Bangladesh is gradually becoming known for its ability to produce good quality fast fashion within a short period. As a result, Bangladesh has established itself as a reliable supplier to American retailers.

For geopolitical reasons, many buyers have opted for Bangladesh instead of China. All in all, the position of Bangladesh-made garments in the US market has been getting stronger in recent years. Due to the ongoing China-US tensions, a significant portion of orders has shifted to Bangladesh.

In addition, USA and European fashion brands are turning away from China and towards countries that produce safe, sustainable clothing. And their investments are gradually shifting to developing markets.

At the same time, other top apparel-exporting countries are suffering from a number of factors, including increased production, fuel costs and higher average monthly wages for workers. Due to this, those countries are getting out of basic and semi-basic clothing manufacturing.

It should be noted that the garment export industry of the top garment-producing countries - Vietnam, Turkey and India are also facing various challenges. The prices of products produced in these countries have decreased significantly. On the other hand, high borrowing rates have increased the cost of production manifold in some of these other countries.

Entrepreneurs in Bangladesh have invested heavily in this sector in recent years. As a result Bangladesh made garment industry has been increasingly recognised as a more reliable apparel sourcing country.

Also, since the Rana Plaza disaster in 2013, Bangladesh has been emphasising innovative and sustainable practices in the garment and textile sector. At the same time, as a sustainable sourcing country, Bangladesh is developing a responsible landscape ecosystem.

As a part of sustainable practices, factories in this country have been acquiring the world's leading sustainable certificates including ZDHC, bluesign®, OEKO-TEX®, and GOTS, which has strengthened the brand image of Bangladesh's garments industry in the world.

The garment industry of this country is also one of the pioneers in using safe chemicals. Apparel manufacturers have targeted zero percent use of hazardous chemicals by 2030 under their 'Sustainable Vision'.

Local garment owners have already invested hundreds of millions of US dollars in building LEED-certified garment factories to become more environmentally friendly in the production of garment products. Currently, there are over 200 eco-friendly LEED-certified garment factories. Besides, 500 more factories have applied for certification. Bangladesh in fact leads the world in the field of green apparel factories.

As a result of all these reasons, international clothing brands and retailers continue to import garments made from this country.

Most importantly, the apparel sector is moving away from cheap labour competitiveness and adopting innovativeness as its competitiveness. To maintain competitiveness in the energy sector, garment factories are installing solar panels at a significant rate.

Thus, the industry has sustained export growth in the face of global and domestic challenges. And industry leaders expect a significant chunk of global apparel orders to come to Bangladesh, as well as this trend to continue.

Political world

Business leaders at a recent event in Dhaka said Bangladesh has improved much on labour rights issues, which is why there is no situation or environment to impose trade sanctions on labour issues. Yet, if any sanction is imposed on commerce under the US labour policy, this would be political, they maintained.

They made the remarks while addressing a seminar on "Current labour issues and international trade scenario" organised by the Economic Reporters' Forum (ERF).

Addressing the event, Mohammed Hatem, executive president, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said, "Our labour standard is better than other competing countries and an advanced country like China. Yet, if the US imposes sanctions, it will be for their (China's) gain."

He further said there is nothing to be afraid of the sanctions, and that they will have nothing to say if the sanctions are imposed from a political perspective.

Echoing the factory owners' voice on labour rights issues to some extent, workers alliance body IndustriALL Bangladesh Council (IBC) president Amirul Haque said there have been many talks on sanctions recently.

"However, we want to make it clear that the country is not in that bad situation to face sanctions. Labour standard has improved much. Bangladesh has ratified eight out of 10 fundamental conventions on labour rights issues while the US approved only two conventions. As a result, the US has no right to raise questions on the labour standard of Bangladesh," he asserted.

The US 'labour policy' being referred to is the Presidential Memorandum on "Advancing Worker Empowerment, Rights, and High Labor Standards Globally", unveiled by Secretary of State Antony Blinken on November 16.

"We want to be there for people like Kalpona Atker, a Bangladeshi garment worker and activist, who says that she is alive today because the US embassy advocated on her behalf," Blinken said during the rollout, immediately raising alarm in Bangladesh.

The Bangladesh mission in Washington DC formally alerted the government over the possible impacts of the newly adopted labour policy, saying it may target Bangladesh.

"Though the 'memorandum' appears to be a global policy applicable for all countries, there are reasons to believe that Bangladesh may be one of the targets," the Washington mission said in a letter to the government.

It also noted that the policy is a signal for Bangladesh as the US may take any measure described in the policy in the excuse of labour issues. Besides, the memorandum may have an impact particularly on the apparel sector in Bangladesh.

Undoubtedly, the disagreements at present between the two governments in Dhaka and Washington serve to exacerbate some of the concerns. Some of the entrepreneurs in the RMG industry are seen as supporters of the government, and the BGMEA leaders are most probably right in their assertion that there would be a political dimension to any sanction regime that may target their industry after the election.

As per the presidential memorandum, the US foreign missions would directly interact or deal with labour issues and it may encourage the interested US diplomats or missions to interfere in many internal issues in the countries they are posted in.

"It seems that there are scopes for this policy to be imposed at individual, firm, or state level, if they anticipate or believe the labour rights are violated," read the letter.

The Washington mission particularly noted that there are many reasons to be alarmed in the political context of the memorandum.

"Politics is behind what is said about labour rights in the memorandum, the US would try to use the political purpose in different ways. Therefore, the memorandum is a signal for Bangladesh as the US may take any measure as described in the memorandum in the excuse of labour issues," it added.

So Washington may be tempted to employ this as a political tool, hoping to crank up the pressure on the government in Dhaka to fall in line with its objectives. But it will be wary as well, of the possible repercussions. Any sanctions that adversely affect the industry's earnings will of course risk putting many workers out of work, thus proving counter productive. Besides, there is no guarantee that the political ends will be met. As such, the US will be wiser to choose the path of engaging with their Bangladeshi counterparts, through organisations such as AAFA. To that end, the letter we learned of this week is not necessarily bad news for Bangladesh.

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