Home ›› National

BGMEA clarifies LC clause regarding 'trade sanction'

Staff Correspondent
06 Dec 2023 20:54:29 | Update: 06 Dec 2023 20:56:34
BGMEA clarifies LC clause regarding 'trade sanction'

The global trade landscape is changing fast; human rights and environmental due are getting increased priorities, while geo-political issues are also influencing trade. Since Bangladesh’s economy and its growth are heavily reliant on trade, any development around trade policy concerns BGMEA.

Therefore, BGMEA feels the urge to make this statement to clarify few issues creating confusion.

A copy of a letter of credit (LC) from a foreign buyer has come to BGMEA’s attention.

The LC contains the following

“We will not process transactions involving any country, region or party sanctioned by the UN, US, EU, UK. We are not liable for any delay, non-performance or/ disclosure of information for Sanctions Reasons”.

There is a concern and confusion caused by the interpretation of this clause that a sanction might have been imposed against Bangladesh, which is not correct.

This is to be noted that the LC came from a particular buyer, and this is not a statutory order or notice by any country. So this should not be misinterpreted as a measure of trade enforcement or economic sanction on Bangladesh.

This is to further clarify that individual buyers / entities may have their own internal policies and protocols, but a LC copy or a private commercial instrument is not an official declaration. Moreover, BGMEA did not receive any information from our diplomatic mission or from any official source to support any sanction or trade measure.

Workers’ rights and wellbeing is a supreme consideration for us. The Government of Bangladesh has pledged to implement a labor roadmap by 2025 and making all the efforts to implement it, including the amendment of labor act in 2013, 2018 and 2023. The labor rules was promulgated in 2015 and amended in 2022. The Bangladesh EPZ Labour Act was passed in 2019 and EPZ Labor Rules promulgated in 2022. The previous requirement of 30 per cent workers participation to apply for union registration of a factory (popularly known as ‘threshold’) was reduced to 20per cent, which is further reduced in the recent amendment to BLA making it 15per cent for factories employing more than 3000 workers. For group of companies the threshold was maintained at 30per cent, which has also been reduced to 20per cent. Contribution to the Central Fund for the workers wellbeing is legally provisioned; in the financial year 2022-23 around 14 million dollars is contributed to the fund by this industry. In collaboration with GIZ and ILO, Employment Injury Scheme (EIS) is now being piloted in the RMG industry, which is unprecedented in Bangladesh. Elected Worker’s Participation Committee and Safety Committee are made mandatory. Some of the best performing Better Work factories in the world are in Bangladesh. With the ILO we completed a training project on “Promoting Social Dialogue and Industrial Relation in the Bangladesh RMG sector (SDIR). To strengthen the existing committees at factories, particularly participation committee, safety committee and anti-harassment committee, BGMEA has trained a number of factories in Dhaka and Chattagram as a pilot intervention in collaboration with GIZ. There are numerous other programs by brands, retailers, development partners and the factories to strengthen the industrial relations, including HER project, maternity protection through Mothers@Work project in collaboration between BGMEA and UNICEF, mental healthcare and wellbeing services by Moner Bondhu, and so on. Many more initiatives are under consideration to make our manufacturing process transparent, accountable, responsible. All these initiatives are aimed to further improve rights and wellbeing of the workers.

After the tragic building collapse in 2013, the industry has gone through a major safety overhaul led by the national initiative and complemented significantly by buyers’ driven program the Accord on Fire and Building Safety in Bangladesh, the Alliance for Bangladesh Worker Safety. To complete the safety remediation plan, a factory on an average spent around USD 500,000, which was 4-6 times higher if it required to retrofit or relocate the plant. To carry forward the progresses made by these initiatives and to establish national monitoring, the RMG Sustainability Council (RSC) is established in June 2020, bringing the Bangladesh RMG safety monitoring regimes under one umbrella through an inclusive and consensus-based decision-making process.

As far as financial benefit of the workers is concerned, minimum wages increased by more than six times since 2010; 5per cent annual increment of wage and 2 festival bonuses (each equivalent to one month’s basic wage) is mandatory, the medical leave of workers’ are now paid for 14 days at full wages instead of half wage, provision for annual leave has been revised making it 1 day for every 18 days of work from 1 day for every 22 days, workers can en-cash 50per cent of their total annual leave by law which was not in the law before.

We are also leading in the area of green transformation. Bangladesh is now the home of 204 LEED certified green factories, of which 74 earning the prestigious Platinum rating and 116 achieving Gold status. 500 more factories are in the pipeline for certification. 54 out of globally top 100 highest-rated LEED green factories are in Bangladesh. Not only that, 9 out of globally top 10, and 18 out of globally top 20 LEED certified factories are in Bangladesh. And it’s truly a matter of pride that the highest scoring factory in the world is in Bangladesh with a score of 104. 

We understand that the human rights and environmental due diligence is getting increased importance for many of our export markets. The Government of Bangladesh is engaged with our trade partners. Recently, the US Presidential Memorandum signed on 16 November 2023 to ‘advance worker empowerment, rights, and high labour standards globally’ adds significant weight to the ongoing global labour campaign, as it appears to be quite unique in terms of engagement and enforcement. We respect the spirit of it and find an alignment with its core principles. Though the Memorandum stipulates a number of measures including ‘deploying the full range of diplomatic and assistance tools and, as appropriate, financial sanctions, trade penalties, visa restrictions, and other actions’, however, this is not adopted for Bangladesh, rather it is a unilateral stance of the United States of America on worker rights issue.

We have seen similar instances in the past of quoting a LC clause from a buyer to generalize it as a sanction on Bangladesh, and made our position clear against such misrepresentation of fact. However, we don’t support the inclusion of such clause in commercial instrument if it is practices for trading with Bangladesh only. BGMEA urges its Members, receiving LCs having such clause as mentioned above, to communicate with the respective brand(s) and solicit a clarification if such clause is mentioned for Bangladeshi suppliers only. If the clause appears only in the LCs issued in favour of Bangladeshi suppliers, then this violates ethics. In such scenario, we would urge our Member factories to take the matter with utmost importance, and, if necessary, to review / reconsider continuing business with such buyer(s).