European Union (EU), one of the main export destinations for Bangladesh Ready Made Garments (RMG) products, is the largest trading partner accounting for more than 25 percent of Bangladesh’s total trade. The EU works closely with Bangladesh in the framework of the EU-Bangladesh Co-operation Agreement, concluded in 2001. This agreement provides a broad scope for co-operation, extending to trade and economic development, human rights, good governance and the environment.
Figure: Head of Delegation of the European Union to Bangladesh, Ambassador; Rensje TEERINK.
EU imports from Bangladesh are dominated by clothing, accounting for over 90% of the EU’s total imports from Bangladesh.
H.E. Rensje Teerink, Ambassador of the EU to Bangladesh, in a recent conversation with Textile Today opens up about trade relation between Bangladesh and EU, safety condition in Bangladesh garment industry, labor rights issue, fair product etc.
Textile Today: How do you see the economic growth of Bangladesh? Is it on the right track?
H.E. Rensje Teerink: I think Bangladesh is doing very well. Bangladesh is one of the countries of South Asia that has sustained high growth more than 7 percent in the last few years, which is a very good trajectory. I think we are also very hopeful in seeing the whole graduation exercise to graduating from the LDC group and that should happen if this continues by 2024.
I think this is quite commendable to see that this year there was a big ceremony for graduation that Bangladesh is one of the few countries that actually managed to attain the three criteria. This achievement needs to be maintained and has to be reassessed over the six-year period. It means that 2024 is the first date that the graduation can actually happen. Bangladesh has already attained a lower middle-income status in 2015.
Therefore, I think we can be very optimistic but that does not mean that there are no challenges. I think the challenges are to maintain the growth; it is to diversify the exports as now it is very much dependent still on textiles of course and the garments sector but it is also attached to be a more crowded export market. Newcomers are also coming into the trade. So, for Bangladesh to maintain this position will be quite a big challenge.
Thereby diversifications are needed; some signs of progress are already made in the pharmaceuticals. I think another important thing is to focus on inclusive growth, have to take everybody along. I think that is a little bit of a challenge for Bangladesh that it has not performed as good as some other countries in South Asia as per as inclusive growth is a concern.
Bangladesh should also focus on other global vulnerabilities like climate change. All industrialists of the country need to take the responsibility also. The number of young people entering the job market every year that would be another big challenge to provide job opportunity for these young people. Bangladesh needs to focus on social protection issues and EU is supporting Bangladesh with their development cooperation programs.
EU is mainly focusing on primary and secondary education, including vocational education and training. EU also has a very large budget for supporting social protection. These are the important areas where EU can support Bangladesh.
Textile Today: Bangladesh will turn into a Developing Country from the Least Developed Country by the year 2027. How can Bangladesh prepare for the transformation? In which pattern EU-Bangladesh trade will be transformed after the transformation?
H.E. Rensje Teerink: Normally few consequences are there related to this process. One is that the eligibility for funding as an LDC country will be disappeared. This will have an impact on ADB (Annual Development Budget), and the World Bank how they will provide loans etc. For the EU we have an instrument, which is called Development cooperation instrument. Once Bangladesh will have graduated, it will not be eligible anymore to receive this development funds.
That is not to say that there will not be funds from other instruments for Bangladesh. We have partnership instruments like NGOs, non-state actors etc. Especially in the investment program where we feel that we need to cooperate with the private sector also. So there will still be avenues for cooperation but there will no longer be development cooperation instruments as we have now. For which we have 700 million Euros for Bangladesh starting from 2014 to 2020.
EBA facilities can be withdrawn, if the European Commission sees any country which is privileged by the EBA, but that is not respecting human rights, turning back democracy etc. It is not that this is always guaranteed. I think for Bangladesh what is important is to make some progress to become fully ILO compliance. In terms of labor right, what we think is that there should be some changes in the labor law especially in EPZ. The labor should not be subjected to more exploitations as anywhere else in the country. Therefore, these are the things that need to be looked into.
There are also trade applications as well. Bangladesh is benefitting from ‘everything but arms skill’ under the GSP resume. That means quota-free and duty-free access to the European Union of everything from garments to pharmaceuticals except of course arms and ammunition. This will have to change and Bangladesh will have to apply for GSP+. EBA facilities can be withdrawn if the European Commission sees any country which is privileged by the EBA, but that is not respecting human rights, turning back democracy etc. It is not that this is always guaranteed.
I think for Bangladesh what is important is to make some progress to become fully ILO compliance. In terms of labor right, what we think is that there should be some changes in the labor law especially in EPZ. The labor should not be subjected to more exploitations as anywhere else in the country. Therefore, these are the things that need to be looked into.
Textile Today: What is your viewpoint on safety condition in the Bangladesh garment industry after the completion of the 1st phase of Accord & Alliance? How do you evaluate Accord & Alliance in terms of safety transformation in Bangladesh Apparel Sector?
H.E. Rensje Teerink: Sorry to say, I have not been able to visit a lot of factories so far. It is my plan to do so. What we hear from our compact partners and from the Accord and Alliance as well is that an enormous progress has been made in many factories. Many factories also have been closed. Many factories have really managed to upgrade their facilities. Accord only looks at the export-oriented factories. It does not look into those factories that are producing goods for the local market.
So, it’s not to say that the entire sector is totally safe. What we also hear that the factory safety is a long-term process. In addition, slippages are also a part. It is not like that once a factory is safe, it will still be safe enough until next year. There should be regular inspections. I think there is the importance of Accord and Alliance to oversee this process. We feel that they should be allowed to stay in Bangladesh.
Engagement can be done in a better way than they have done so far. Even BGMEA have realized their own interest to work together with Accord and Alliance. It has rebranded Bangladesh to an important extent also in Europe. After Rana Plaza, Bangladesh suddenly became known as the sweatshop country where people were working on miserable circumstances. Now I think this is important to keep the image that a lot has changed. In addition, the role the government sector has played in uplifting millions of people from poverty and empowering especially the women who are actually the workers in the industry.
Figure 2: Rensje TEERINK, talking with the Textile Today team.
Textile Today: Do you think that Bangladesh is capable of ensuring the safety in Garment manufacturing on its own?
H.E. Rensje Teerink: I think it is not a question of capability. I am sure Bangladesh will be capable. However important to be assured that whatever monitoring will be in the place they do it genuinely and transparently. Bangladesh has to make sure that the inspection will be done accurately. It is not a matter of technical capacity. What Ministry of labor is doing is training a lot of engineers to really be ready for that. However, the main question is, of course, to be honest with the inspections. The Industry really needs to continue on this path to be safe in future.
Textile Today: Now at this moment, the cost of garments production in Bangladesh is increasing day by day. On the other hand, the EU buyers are asking for a lower price. Survivals have become very difficult for Bangladesh apparel sector. How could this problem be overcome?
H.E. Rensje Teerink: This is a very big problem. I think there is a lot of responsibility for the buyers because you cannot only one hand expects to have a fair product, on the other hand, squeezing ultimately the labors. Workshops like responsible purchase practices are an important first step that those manufacturers and the buyers are sitting around the table and looking at what are the problems and what are the way outs.
On the part of the buyers, there are a lot of practices that are difficult to handle for the manufacturers like late orders or changes. The European Commission has a small project, which is funded by DG trade on responsible purchase practices in the garment sector. This is some funding that goes to address this problem. Ultimately, I think it is the consumer that needs to be more aware. In Europe, this process is happening. I think the whole concept of fast fashion needs to go ultimately because the concept is not eco-friendly.
I think there is a lot of responsibility for the buyers, because you cannot only one hand expects to have a fair product on the other hand squeezing ultimately the labors. On the part of the buyers, there are a lot of practices that are difficult to handle for the manufacturers like late orders or changes. Ultimately, I think it is the consumer that needs to be more aware. In Europe, this process is happening. I think the whole concept of fast fashion needs to go ultimately, because the concept is not eco-friendly.
Textile Today: You know that around 4.5 million people are working in the Textile and Apparel industry. Their wages are one of the lowest in the world. How can the Apparel industry pay more for them?
H.E. Rensje Teerink: I was quite surprised to learn that Cambodia who has not really signed to the ILO conventions is actually paying much higher wages to their garment workers than here in Bangladesh more than double. Here probably the manufacturers who have to really look at this and try to pay more fair wages. The workers are earning 5700 tk. per month. There should be the realization that workers need a higher wage.
In order for that to happen, the labors themselves also need to be able to organize. Freedom of association is needed. Labor rights are important here. This is where Bangladesh is lagging behind. Necessary amendments are needed for Bangladesh labor law and especially the EPZ law.
By the time hopefully, this laws will go to parliament. We heard that this would happen in September. That will show really a commitment that Bangladesh is ready to become ILO compliance. In addition, this will help the labors to organize themselves.
Textile Today: Bangladesh Textile and Apparel industry is one of the largest in the world. There are many opportunities for EU companies to invest in the backward and forward linkage. How do you see this?
H.E. Rensje Teerink: I just want to say that for companies to invest in Bangladesh there are still many hurdles. Bangladesh’s growth model is incredible that Bangladesh has achieved such a high growth level of more than 7 percent despite it being one of the most difficult countries to do business. If you see the ease of doing business report that came out recently a couple of months ago Bangladesh is at a 140th place quite a near the bottom-most for ease of doing business.
The government is trying to harmonize the rules etc. There should be more progress that the investors could easily come to Bangladesh and invest. It would benefit everybody.
Textile Today: The US government is imposing new tax and tariffs on trade. We are seeing the similar reply from the EU and China. What will be the impact of this in global textile business?
H.E. Rensje Teerink: I think it is regrettable to see that electoral trade rules are little bit being sacrificed for short time political gains. I think the EU never wanted to be a part of that. We are in a global market. If the US signals out to the EU for tariffs and order stiff in that way we have to respond. That I do not think has any impact so far on Bangladesh.
Bangladesh still continues having this trade privileges for export to the EU. Bangladesh has a duty-free and quota-free access to the EU. That shows our commitment. I do not think any changes until unless Bangladesh graduate or we find that Bangladesh is not progressing satisfactorily on certain key issues.