On borrowed time: Five years after the Rana Plaza disaster, the Bangladesh Accord faces court-ordered closure

 

Five years ago, sometime before 9am on 24 April 2013, cracks started to appear in the Rana Plaza building in the Dhaka District of Bangladesh, revealing a structural failure that caused the eight-story commercial building to collapse. The building contained five garment factories supplying major global brands and retailers.

It only took 90 seconds for Rana Plaza to collapse, but it took two weeks to search for the dead. When the search ended on 13 May 2013, the total of lives lost was over 1,100.

The tragedy spurred textile and clothing companies into action. In May 2013, global fashion brands and retailers and trade unions signed the Accord on Fire and Building Safety in Bangladesh (the “Bangladesh Accord“), a ground-breaking worker safety agreement. Adidas, H&M and Esprit are amongst the signatories.

The most famous pillar of the Bangladesh Accord is its five-year legally binding agreement between brands and trade unions to ensure a safe working environment in the Bangladeshi ready-made garment industry. This feature gained notoriety when a case was filed at the Permanent Court of Arbitration in The Hague in October 2016 by two global unions, IndustriALL Global Union and UNI Global Union, to hold two unnamed multinational companies to account. The case eventually settled for $2.3 million in January 2018.

There are, however, additional components to the Accord, including, importantly, the creation of an independent inspection programme.

The Accord, which gathered the support of more than 250 brands and retailers from over 20 countries, was originally established for a limited time of five years – until May 2018.

In May 2017, the Remediation Coordination Cell (“RCC“) was established under the government of Bangladesh’s National Initiative, with a view to take over from the Accord to implement the remediation process for garment factories.

In June 2017, leading fashion brands and global trade unions announced at the OECD Global Forum on Responsible Business Conduct that they would enter into a new agreement, which would come into effect in 2018. Later that year, a transition agreement (the “2018 Transition Accord“) was signed, extending the Accord’s mandate for another three years, and allowing it to continue its operations until the RCC was ready to take over the platform’s responsibilities.

Everything seemed on track to guarantee a smooth continuation of the Accord’s activities… until judicial proceedings were started by a Bangladeshi factory owner who had failed to remedy safety breaches, and was therefore removed from the list of factories that Accord signatories are allowed to source from.

The factory owner sued the Accord. In April 2018, in an extraordinary unilateral action, the Bangladesh High Court issued a “suo moto” restraining order against Accord office operations. The restraining order is due to come into force on 30 November. This means that, in two days, the Bangladesh Accord will have to close its Dhaka office, severely limiting its scope of work and its ability to inspect thousands of factories supplying clothes for brands such as H&M, Esprit and Primark.

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What do Bangladesh and Snowden Have in Common?

The country of Bangladesh and US fugitive Edward Snowden are both at the center of questions over the future of two U.S. trade preferential programs — the Generalized System of Preferences (GSP), and the Andean Trade Preference Act (ATPA) programs.

GSP is a program that allows about 5,000 products from about 127 developing countries to enter the United States on a duty-free basis. GSP duty-free access benefits exporters from developing countries as it helps them to be competitive in the U.S. market. US importers also rely on the program for access to lower-priced consumer goods and manufacturing inputs. Developed countries, like the United States, extend GSP unilaterally to beneficiary countries; it is not the result of a negotiated agreement.

In the United States, the program is authorized by legislation. The US President also has the authority to remove previously eligible countries that fail to meet the specified requirements.

On June 27th, President Obama announced the suspension of Bangladesh from the program. Though under review for some time, the timing of the decision is a direct result of the death and injury in April (2013) of hundreds of garment workers as a result of poor working conditions.

Bangladesh garment factory (Courtesy of Wikipedia Commons)

Bangladesh garment factory (Courtesy of Wikipedia Commons)

Sadly, it is difficult to see how the lot of the workers has been improved by this decision. The garment industry is notoriously fickle. Companies have moved operations all around the world in search of the cheapest inputs and of countries whose products are allowed duty-free access back to their home markets. Complete loss of GSP access to the US market for products from Bangladesh is likely to result in loss of jobs for Bangladesh workers. We can only hope that the suspension will spur the government and private companies to move at warp speed to improve working conditions.

On the same day, President Correa of Ecuador, who is reviewing an application for asylum by Edward Snowden, announced his intention to refuse the benefits that Ecuador receives under the ATPA. Ecuadorean government officials have accused the United States Government of using the program to blackmail the country for its willingness to review Snowden’s asylum request. Ecuadoran products are also eligible for unilateral duty-free entry under the GSP program. The Obama Administration is also said to be considering expelling Ecuador from GSP. The US Government has been known to wield threats of denying access to GSP and other preferential programs by countries with whose actions they disagree. Ecuador apparently has decided to act first. Meanwhile, however, this leaves Ecuadorean exporters wishing to access the US market at a disadvantage.

Profile of Ecuador's exports (Courtesy of Wikipedia Commons)

Profile of Ecuador’s exports (Courtesy of Wikipedia Commons)

It is also worth noting that both the GSP and ATPA programs are set to expire on July 31, 2013. This won’t be the first time. The programs periodically expire and are then renewed again. Unfortunately, these periods of expiration seriously inconvenience and harm the companies that rely on the programs. President Correa’s actions increase the likelihood that the ATPA may not be renewed any time soon, if at all. Trade programs, like GSP and ATPA, that provide a lifeline for many small exporters in developing countries, should not be held hostage to politics.