EU considers trade action after Bangladesh factory collapse

Wed May 1, 2013 3:24pm IST

Rescue workers attempt to find survivors from the rubble of the collapsed Rana Plaza building in Savar, 30 km (19 miles) outside Dhaka April 30, 2013. REUTERS/Khurshed Rinku

Rescue workers attempt to find survivors from the rubble of the collapsed Rana Plaza building in Savar, 30 km (19 miles) outside Dhaka April 30, 2013.

Credit: Reuters/Khurshed Rinku

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REUTERS - The European Union is considering trade action against Bangladesh, which has preferential access to EU markets for its garments, in order to pressure Dhaka to improve safety standards after a building collapse killed hundreds of factory workers.

Duty-free access offered by Western countries and low wages have helped turn Bangladesh's garment exports into a $19 billion a year industry, with 60 percent of clothes going to Europe.

But any action by the EU on Bangladesh's duty-free and quota-free access would require the agreement of all member states and could take more than a year to implement.

"The European Union calls upon the Bangladeshi authorities to act immediately to ensure that factories across the country comply with international labour standards...," the 27-nation bloc said in a statement issued by EU foreign policy chief Catherine Ashton and Trade Commissioner Karel de Gucht.

The Swiss-based IndustriAll Global Union, which represents 50 million workers worldwide, on Tuesday set a May 15 deadline to finalise with Western retailers a commitment to a fire and building safety plan for Bangladesh.

"Funds will be made available for inspections, training and upgrades of dangerous facilities," it said in a statement and called on retailers to renegotiate contracts to pay suppliers more in order to guarantee living wages for workers and to enable technical upgrades to factories.

About 3.6 million people work in Bangladesh's garment industry, making it the world's second-largest apparel exporter, behind China. The industry employs mostly women, some of whom earn as little as $38 a month.

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ANGRY MOOD

Anger in Bangladesh has been growing since the illegally built Rana Plaza in Dhaka's commercial suburb of Savar collapsed last week, killing 402 people in the country's worst industrial accident. There were about 3,000 people inside the complex, which was built on a swamp, when it collapsed. About 2,500 people have been rescued, but many remain unaccounted for.

"Why are they taking so much time to pull out bodies?" asked a grief-stricken father who, like many others, has been waiting on the streets near the collapsed factory, hoping for information about his son.

Preparations were being made on Wednesday for the mass burial of around 40 people who cannot be identified.

Several thousand workers rallied in the capital to mark Labour Day, and demanded capital punishment for those responsible for the tragedy. "The owner of the building ... should be hanged to death and compensation should be given to the injured and those who died," said labour leader Moshrefa Mishu. "A healthy and safe atmosphere should be made in the factories."

About 20 people were injured on Tuesday as police fired teargas, rubber bullets and water cannon to disperse protesters in Savar calling for the death penalty for the owners of the building and factories.

The building's owner Mohammed Sohel Rana and his father, Abdul Khalek, are among eight people arrested so far, and police are seeking a fifth factory boss, Spanish citizen David Mayor, although it was unclear whether he was in Bangladesh at the time of the accident.

EU IS BIGGEST MARKET

The factory collapse was the third deadly incident in six months to raise questions about worker safety and labour conditions in the poor South Asian country, which relies on garments for 80 percent of its exports. Clothes made in five factories inside the Rana Plaza building were produced for retailers in Europe and Canada.

In the year to June 2012, Bangladesh's garment exports to the EU rose to $11.37 billion from $10.52 billion a year earlier, according to Bangladesh's commerce ministry. Germany is the main EU market at $3.4 billion, followed by the UK at $2.13 billion, Spain at $1.71 billion and France at $1.27 billion.

Bangladesh's next biggest garment export market is the United States, which accounts for 23 percent, or $4.53 billion.

Late on Tuesday, the EU said it would look at Bangladesh's preferential trade access to the EU market in order to encourage better safety standards and labour conditions.

"The EU is presently considering appropriate action, including through the Generalised System of Preferences (GSP) - through which Bangladesh currently receives duty-free and quota-free access to the EU market under the 'Everything But Arms' scheme - in order to incentivise responsible management of supply chains involving developing countries," said the statement.

Ashton and de Gucht said they were deeply saddened by the "terrible loss of life", particularly because it followed a fire in the Tazreen Fashion factory in a Dhaka suburb in November that killed 112 people.

"The sheer scale of this disaster and the alleged criminality around the building's construction is finally becoming clear to the world," they said.

MEETINGS

Also on Tuesday, following a private emergency meeting of Canadian retailers, the Retail Council of Canada said it would develop a new set of guidelines. That meeting brought together retailers including Loblaw, Sears Canada Inc (SCC.TO) and Wal-Mart Canada (WMT.N), to discuss how to deal with the tragedy.

Representatives of some 45 companies, including Gap Inc (GPS.N), H&M (HMb.ST), J.C. Penney (JCP.N), Nike Inc (NKE.N), Wal-Mart, Britain's Primark (ABF.L), Marks & Spencer (MKS.L) and Tesco (TSCO.L), and Li & Fung (0494.HK), also met officials from the Bangladesh Garment Manufacturers and Exporters Association in Dhaka on Monday to discuss worker and plant safety.

Primark and Loblaw have promised to compensate the families of garment workers killed while making their clothes.

(Reporting by Susan Taylor, Neha Alawadhi, Serajul Quadir and Ruma Paul; Writing by Paul Tait and Michael Perry; Editing by Mark Bendeich and Ian Geoghegan)

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