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Corporate - October 9, 2023

Rumors of ban and withdrawal of GSP

BGMEA president

Saleh Ahmed Hussain: The crisis in the large economies of the Western world due to the impact of Covid and the war in Ukraine is not going away quickly. They are moving towards contractionary economic system besides increasing the interest rate of bank loans to curb inflation. This reduces the flow of cash in the hands of consumers. Purchasing power is decreasing. Due to this, the export of manufactured garments from Bangladesh has decreased by more than 28 percent compared to last year. Of this, the European market has decreased by about 14 percent.
As a less developed country, Bangladesh has been exporting manufactured garments to the European market without duty under the GSP facility. The members of the European Union Parliament asked to re-evaluate the GSP benefits of Bangladesh if the human rights issue is not resolved and the next parliamentary elections are not free, fair and participatory. Traders fear that the European Union may impose tariffs on exports of ready-made garments if the next election is not acceptable.
There are rumors that the United States may impose sanctions on various businessmen and business establishments in Bangladesh. This has created discomfort in the business community. On the other hand, there are rumors that Europe may suspend GSP benefits for garments made in Europe. BGMEA president Farooq Hasan recently talked to media regarding the ban and GSP issue.
Question: How are you?
Farooq Hasan: The situation of the country is not supposed to be good! I am under great pressure. I am under pressure from all sides. Pressure from owners, pressure from buyers. Different people are calling from different places wanting to know it. Phone after phone is coming. I am stressed about these.
Question: US may take more action after visa ban, hears What do you businessmen think?
Farooq Hasan: Our garment sector has not yet been affected by the US visa policy. But if more restrictions come after that, then there will be many problems in our export sector. Now there is so much writing on social media, it is creating panic among the owners of the garment sector. Prohibition is coming – this news has spread panic among our owners.
Question: What do the buyers of ready-made clothes think about the current situation in Bangladesh?
Farooq Hasan: Buyers are worried about the current situation in Bangladesh. What happens around the next election? Buyers are thinking about what is going to happen in the upcoming elections. They feel that if there is political unrest around the election, even if the purchase order is given, the goods cannot be delivered properly. Apart from that, another thing that is working among the buyers is that Bangladesh is probably going to face various trade restrictions. Even on Saturday two buyers told me their concerns. I can’t tell them much about it. All in all, I am quite stressed.
Question: The European Union has asked Bangladesh to reconsider its GSP benefits on manufactured garments if the human rights situation in Bangladesh improves and the upcoming elections are not fair. What will be the effect on the export of our clothes if the tariffs are placed on the clothes made in Europe?
Farooq Hasan: If Europe imposes tariffs on exports of ready-made garments, our exports will collapse. Our garment exports will no longer survive. The garment sector will be severely affected. There is no way we can export garments to the European market with duty. European tariffs will reduce the competitiveness of Bangladeshi clothing. If tariffs are imposed, we will face a very difficult situation. We do not want this tariff. I am telling them about this when I meet the ambassador so that this tariff is not imposed. The government should be aware of the negative impact that tariffs will have on our garment exports.
Question: Have you communicated these concerns to the government?
Farooq Hasan: We have expressed our concern to the government regarding the talk of imposing tariffs in the European market, around the elections. As we say again and again, we are concerned about these issues. I think the government will take our concerns into consideration. I spoke about these issues on Saturday with the ambassador of the European Union and the ambassador of Australia.
Question: It is heard that the US may impose sanctions against certain businesses and institutions.
Farooq Hasan: I don’t think US will impose economic sanctions on Bangladesh. However, some traders and business establishments may be sanctioned. If the US does that, it will have a negative impact on our business.
Question: The US and its Western allies have been in talks for days to amend Bangladesh’s labor laws. US officials at various levels who recently visited Bangladesh are talking about labor laws and workers’ wages.
Farooq Hasan: Western countries including the United States have been asking for revision of labor laws for a long time. I am constantly informing the government of the concerns of the United States and the European Union regarding the labor law.
I have told the government that they (EU-US) want to amend the labor laws in Bangladesh in the light of ILO universal labor rights. I have been informed by the Government that the revised Labor Act is in the Cabinet. The new amended labor law will be passed soon. I am pushing hard in this regard so that the government passes the Labor Act at the earliest. I can say from my side to the Supreme Govt. It will ultimately have to be done by the government.
Question: US, EU call for workers to organize in EPZ What is the government’s thinking in this matter?
Farooq Hasan: The demands of the United States and the European Union for giving the opportunity to workers’ organizations (trade unions) in EPZ have been going on for a long time. The United States and the European Union have told me that if workers are not given the right to organize in EPZs, you will be in trouble. We have asked the government to consider their demands.

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