An opinion article in the New York Times has blamed the poor safety conditions in Bangladesh garment factories to high American import duties that forces contractors to “scrimp on labour standards to stay competitive”.
“While American officials have condemned poor safety conditions at the factory and have urged the Bangladeshi government to raise wages and improve working conditions, the United States can do much more: It should bring down high tariffs on imports from Bangladesh and other Asian countries, which put pressure on contractors there to scrimp on labor standards in order to stay competitive,” says the NYT article entitled “American Tariffs, Bangladeshi Deaths.”
The United States imported more than $4 billion worth of apparel and textiles from Bangladesh last year.
“So it has an interest in giving the country’s garment industry some financial room with which to improve conditions for the three million employees, most of them female, who work in the industry,” the article by Sanchita B.Saxena argues.
It says that while monitoring systems have improved at the higher end of the industry, that’s not the case at the level of the sub-contractors, in factories such as the Tazreen Fashions factory, scene of the deadly Nov 24 fire.
The article argues that it was important to treat Bangladesh at par with Mexico as a developing country because that would make it eligible duty-free access to the American market as a result of free-trade agreements.
“Bangladesh still faces a cost squeeze that is ultimately felt most acutely on those lowest on the production chain, especially the lowest-paying subcontractors, among whom corruption is endemic,” says the NYT article. “It takes its greatest toll on workers.”
In the United States federal fiscal year that ended in September 2011, Bangladesh exported $5.10 billion in goods to the United States, of which less than 10 percent were eligible for exemption from import duties. On the rest, Bangladesh had to pay at least 15.3 percent in tariffs.
“The tariffs were equivalent to imposing a $4.61 tax on every person in Bangladesh, a country with a per-capita annual income of $770,” the article reveals.
It says that Bangladesh this year may be paying more than $600 million annually in American tariffs, even as the United States Agency for International Development said it was committed to $200 million in development aid to Bangladesh.
Some in US argue that reducing restrictions on Bangladeshi imports may hurt even poorer countries, in sub-Saharan Africa, that enjoy duty-free access under a 2000 law, the African Growth and Opportunity Act. But studies have shown that extending duty-free access to South Asian goods would have negligible costs, yield huge benefits for Bangladesh’s economy and have minimal negative impact on African exports.