On 26 March, Bangladesh celebrated 50 years of independence. Through this period its economic progress has been substantial, particularly in the last two decades which has seen its GDP rise from 53Bn€ to 303Bn€, exports of ready-made garments from 2.6Bn€ to 18Bn€, and its poverty head count drop from 50% to 25%.
The extraordinary growth in RMG exports is largely due it being an “Everything But Arms” (EBA) beneficiary within the EU’s unilateral Generalised Scheme of Preferences and therefore zero duties, instead of the usual 12%, being imposed on its exports to the EU. This has resulted in it becoming the EU’s second largest supplier country for RMG.
However, the UN Committee for Development Policy is set to confirm that Bangladesh will graduate from least developed country status in 2026. Although this is a significant achievement, it means that in 2029 it will no longer qualify for EBA status within the EU’s GSP but instead ‘standard GSP’ which only provides a reduction in duty of 20%. It will also impose a “double transformation” requirement on RMG – i.e., duty preferences will not be granted if clothing is made from fabrics originating from outside Bangladesh. This could have a dramatic impact on the RMG sector.
Since the Rana Plaza disaster of April 2013, Bangladesh has made significant improvements to building safety thanks largely to the setting up of the Accord on Factory and Building Safety – of which half the 200 signatories are amfori members. Now that the Accord is about to expire (31 May), we hope that it is extended or the alternate initiative, the RSC, can continue the work of the Accord effectively.
Important milestones still lie ahead in the coming month: the ILO is set to discuss Bangladesh’s progress on the complaint from 2019 concerning non-observance of ILO conventions on Labour Inspection (no. 81), Freedom of Association and Protection of the Right to Organise (no. 87), and on the Right to Organise and Collective Bargaining (no. 98). The European Commission will also consider whether Bangladesh has shown substantial progress on improvements to the Labour Law as part of the roadmap that was set at the end of 2019.
amfori serves its members in monitoring and capacity building activities within their supply base. This includes industries beyond the RMG sector that are gaining importance such as leather products, jute, tea, agriculture, fishery, ceramics and household goods. amfori recommends that Bangladesh continues to diversify its industry to alleviate the consequences of moving from EBA to standard GSP.
Worth noting is that the German-Bangladesh Economic Forum has written a book “Celebrating 50 years of Bangladesh” (the chapter “From Sweatshop to Manufacturing Hub”, find out more here.