US embassy cable - 05DHAKA3905

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