PETITION TO SUSPEND GSP BENEFITS FOR BANGLADESH

C O N F I D E N T I A L SECTION 01 OF 02 DHAKA 003905

SIPDIS

STATE PLEASE PASS TO USTR/AWILLS AND BSTILLMAN

E.O. 12958: DECL: 08/10/2010
TAGS: ELAB ETRD PREL PGOV BG
SUBJECT: PETITION TO SUSPEND GSP BENEFITS FOR BANGLADESH

Classified By: A/DCM D.C. McCullough, reason para 1.4 b.


1. (C) Summary. BEPZA's implementation of the 2004 EPZ law
has been problematic, and there are cases of serious
management mistreatment of workers, but the overall picture
is mixed. Therefore, in the absence of "substantial new
information warranting further consideration of the issue,"
we believe it is premature to accept AFL-CIO's new GSP
petition. In or out of the petition context, we will
continue to monitor and champion worker rights. End Summary.


2. (SBU) On August 10, Solidarity Center (SC) Bangladesh
Field Representative Rob Wayss called on Charge to brief her
on SC's activities and his perceptions on the implementation
of the 2004 freedom of association law in the export process
zones (EPZ). A/DCM, laboff, and USAIDOFF sat in.


3. (SBU) Wayss noted that SC's efforts to promote compliance
with local wage and hour laws at Bangladeshi garment
factories are often controversial here since they can lead to
the closure of "bad" factories with the loss of hundreds of
jobs. He prefers, he said, to focus on the competitive
advantage a "good" factory enjoys in courting foreign buyers.
It was "tragic" that 750 workers lost their jobs when one
factory lost orders for being non-compliant, he said, but the
good news was that those orders migrated to another factory
in Bangladesh. Wayss remarked that European buyers are
becoming more sensitive to compliance issues, which enhances
the pressure and the incentive for reputable Bangladeshi
factories to treat workers properly.


4. (SBU) Turning to the EPZ law, he stated there have been
serious problems in its implementation. Worker
Representation and Welfare Committees (WRWC) election
information was often not passed to workers in a timely
manner, there are recurring instances where management
manipulated and harassed candidates, there was a long delay
in registering and therefore effectively activating the WRWC,
and no dispute resolution mechanism has been put into place.
There is "not a lot of good faith" by management and the
Bangladesh Export Processing Zone Authority (BEPZA),which
continues to deny allegations of worker harassment or
violence against workers, despite significant evidence to the
contrary.


5. (SBU) On the other hand, Wayss said, there have been 200
elections, registrations were eventually issued, and BEPZA
has "made an effort" to encourage investor adherence to the
law. Ultimately, though, BEPZA cannot stand up against
determined obstructionist investors and, in the case of one
Taiwanese company who had a senior manager deported for
violating labor law, threats to deter potential investors
from coming to Bangladesh. Other problems are administrative
in nature and the novelty of some aspects of the law, like
setting up accountable industrial labor relations boards to
resolve labor/management disputes. In the context of the
long battle to introduce freedom of association in the EPZ,
passage of the admittedly imperfect 2004 law was "a
monumental step forward," he said.


6. (C) Comment: There have been serious problems with
implementation of the 2004 law, including serious
mistreatment by management of WRWC candidates and the refusal
of management to recognize duly-elected WRWC. Such problems
are not surprising, given the strength and wariness of many
investors, as well as the administrative and other
deficiencies that hamper BEPZA and other BDG regulatory
bodies. We will continue to monitor this situation closely,
and stress to government, business, and the Bangladeshi
public the great importance we attach to worker rights and
the introduction of unrestricted freedom of association in
the EPZs. We believe we can do this effectively, inside or
outside the context of a GSP petition review.


7. (C) We understand that, according to the GSP law, there
should be "substantial new information warranting further
consideration of the issue" to accept a new petition. In our
judgment, BEPZA's performance has been seriously flawed but
mixed overall, and implementation trends and the law's impact
will not be clearer until November 2006, when EPZ workers
have the right to form free trade union associations. If the
issue is whether accepting the petition would promote or
retard implementation and BDG sensitivity to worker rights,
our guess is it could be counter-productive. Senior BDG
ministers have already raised the issue with us as a serious
matter, and we know that obstructionist investors are already
arguing that deference to USG pressure is pointless because
the threat of a new petition violates the spirit of the
understanding with AFL-CIO and others that led to the passage
of the EPZ law. (In fact, Wayss says (protect),AFL-CIO
warned investors there would be a new petition but promised
not to push it strenuously.)


8. (C) Thus, our view is that the new GSP petition should not
be accepted for consideration.
CHAMMAS