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News Clips 1 June, 2013




[ FPCCI rejects plan to withdraw zero-rating on exports ]
[ FPCCI formulates recommendations to boost textile exports ]
[ USA: Unions Press to End Special Trade Status for Bangladesh ]
[ US retailers to forge new safety plan for Bangladeshi apparel factories ]

FPCCI rejects plan to withdraw zero-rating on exports   [ top ]

DAILY TIMES, June 1, 2013
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) opposed the decision to withdraw facility of zero-rating of the five exports sectors and imposing sales tax. President FPCCI Zubair Ahmed Malik explaining the issue said there was no net collection by Federal Board of Revenue (FBR) on these five sectors. He said the government wanted to collect sales tax and then refund. There is bound to be corruption blockage of funds and unnecessary hassle. He said this system was going on well and also appealed to the new government to discuss this matter with the FPCCI and stakeholders before making any change and also requested to incoming Prime Minister Mian Nawaz Sharif to direct FBR to hold this decision until a meeting held with stakeholders. He said the sales tax on exports had become miserable failed as massive corruption in refund system resulted in loss of revenue to the tune of billions of rupees. He said some vested interests once again trying to open up floodgate of corruption to the FBR officials to mint money while genuine exporters would be left to suffer due to blockade of their capital.

FPCCI formulates recommendations to boost textile exports    [ top ]

THE NEWS, Shahnawaz Akhter, May 31, 2013
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has formulated recommendations to increase textile exports for the new government to make part of policy decisions in the early days of its tenure.

At a meeting of FPCCI office bearers and textile experts held on Thursday, issues such as access to US markets and those pertaining to US GSP plus, restoration of zero-rate tax for export-oriented sectors and continuation of textile ministry were discussed.

Gulzar Feroz, vice president of FPCCI, said that security and energy issues were being faced by all the industrial sectors in Pakistan and the new government should resolve these issues on a priority basis for economic growth.

He said that the textile sector was the largest employment generation sector in Pakistan and the sector needs to be saved.

Mirza Ikhtiar Baig, leading textile businessman and former advisor to prime minister on textile, said that Pakistan was manufacturing all the world’s top brands. He said that this sector should be provided a conducive environment as the cost of manufacturing was rising by 25 percent in wages alone.

Baig said that Pakistani textile products had better prospects considering the trade with India.

He suggested that the textile ministry should be continued under the new setup or at least be made part of a ministry headed by a federal secretary.

The PML-N leaders, who are going to form the new government, announced recently that only 26 ministries would function, which would help to reduce current expenditures.

Baig said that there should be no further tax burden on this sector and the government should impose further taxes on those people who were not under the tax net. Dawood Jhakura, former FPCCI vice president, said that due to security concerns foreign buyers of readymade garments were reluctant to place fresh orders. He said that continuous protest calls by different political parties had not only damaged the image of the country, but also hampered production activities.

He highlighted that recently Bangladesh had received notices regarding labour laws, which would jeopardise its US GSP plus status. He urged the government to revisit the labour laws to avoid such notices.

A representative of towel, bed sheet and garment industries said that the government needs to prioritise to save the remaining industry.

The representative said that billions of rupees were stuck in shape of rebate of duty and local taxes, despite clear instructions provided under the textile policy 2009-14 that the same should be cleared instantly.

Asif Maroof of the towel manufacturing industry said that the business community faced difficulties in availing bank financing. He criticised the role of Trade Development Authority of Pakistan (TDAP) that it had failed to project local products in foreign markets.

Hanif Lakhani of Lakhani Textile stressed the need for product mix and suggested to increase the range of products.

He informed the participants that the government had announce a scheme of Duty and Tax Remission for Exporters (DTRE), under which raw material imports were exempted from liabilities. He said that the Customs had stopped the facility on the argument that the scheme was only available for exporters having 100 percent manufacturing units.

He requested the FPCCI to take a stand because the scheme was for all the exporters, even those engaged in value-addition.

Shaikh Manzar Alam, member managing committee of FPCCI, said that opening up the US market would boost textile exports.

Dr Shahzad Arshad, chairman standing committee of FPCCI on textile, said that due to economic slowdown the value-added sector had resorted to 40 percent job cuts. He also criticised the role of commercial councilors in foreign countries.

Siddique Shaikh, advisor on social sector to the president FPCCI, at the end of the meeting said that the textile sector should identify those commercial councilors. He also announced that the FPCCI would send experts in ten countries to train commercial councilors, which would help in boosting the country’s exports.

Siddique Shaikh, advisor on social sector to the president FPCCI, at the end of the meeting said that the textile sector should identify those commercial councilor. He also announced that FPCCI would send experts in ten countries for the training of commercial councilors that would help in boosting country’s exports.

USA: Unions Press to End Special Trade Status for Bangladesh   [ top ]

NY TIMES, Ian Urbina, May 30, 2013
WASHINGTON — After several deadly factory disasters in Bangladesh — including the collapse of an eight-story garment factory last month that left at least 1,127 people dead — labor advocates are stepping up pressure on the Obama administration, calling for it to convey its disapproval of working conditions in the country by revoking its special trade status.

But federal officials remain conflicted over the American government’s responsibility for safer labor conditions overseas, and in meetings in recent weeks they disagreed over what combination of carrots and sticks would work best to achieve this goal. Some officials, particularly in the State Department, say that if trade status is revoked, Washington will lose its leverage to pressure Bangladesh to improve building codes and labor rights. Labor advocates and officials from the Labor Department counter, however, that this leverage is lost anyway if the administration is never willing to use it.

“By failing to take serious action before now even in the face of phenomenal, unprecedented death of workers, U.S. trade officials have already sent the wrong message to Bangladesh,” said Brian Campbell, policy and legal programs director of the International Labor Rights Forum, a workers advocacy group. “It’s time to send a strong signal.”

Bangladesh is among more than 125 countries that receive breaks on United States tariffs under a World Trade Organization program, the Generalized System of Preferences, intended to promote economic growth around the globe. The United States trade representative is to decide the fate of the country’s trade status in June.

In meetings this month to discuss the disasters, officials from the State and Labor Departments agreed that Bangladesh had failed to improve labor rights sufficiently but they disagreed over what to do about it.

Some State Department officials argued that taking away Bangladesh’s preferential trade status would damage diplomatic relations with a country that has faced repeated Islamist threats and hurt its economy, which has lately averaged trade-fueled growth of about 6 percent a year.

Bangladesh’s garment industry does not enjoy American duty-free status, though other sectors in the country do. But State Department officials said that a decision by the Obama administration to scale back benefits might prompt foreign brands to reduce orders from the country. It might also lead the European Union, which does exempt the garment industry from tariffs, to revoke this status.

But Labor Department officials argued that more pressure was urgently needed. In December, American officials gave the Bangladeshi government a list of areas requiring improvement in order for the country to avoid losing its status. But there has been minimal progress, officials said. The list called for an end to government harassment of labor organizers and greater rights for workers in the country’s special export processing zones.

During these meetings, American trade officials also pointed out that under the trade agreement they are required to certify that countries receiving trade privileges meet certain eligibility standards, including the protection of internationally recognized worker rights, which are widely ignored in Bangladesh.

Federal labor officials also said the administration should publicly apply pressure on retailers like the Gap and Walmart to sign an international accord providing for a binding inspection program and mandatory improvements in workplace safety, according to officials who participated in the meetings but are not authorized to speak to reporters.

Many major European retailers have signed the international accord but most American retailers have cited liability concerns, opting to do their own audits of factory conditions. Eight Democratic senators wrote on May 16 to retailers including Wal-Mart Stores, Target and Kohl’s, arguing that this type of self-monitoring has proved to be ineffective and urging the companies to reconsider signing the accord.

On Thursday, the Bipartisan Policy Center, a group based in Washington, said it was working with retailers including Wal-Mart Stores, Gap and Target to put into effect a program to improve fire and safety regulations in Bangladeshi garment factories. The State Department declined to answer specific questions about the trade status. But in a written statement, Patrick Ventrell, the acting deputy spokesman, said that his office continued to convey its hope directly to the Bangladeshi government that it would “take additional steps to improve worker rights, including the right to freely associate and engage in collective bargaining.” In a letter to members of Congress this month, Dan Mozena, the ambassador to Bangladesh, argued that good relations with Bangladesh were vital to regional security and United States strategic interests and that labor conditions were improving.

Earlier this year, the Bangladeshi government emphasized the same point in meetings with American trade officials.

“Compliance with rights, including labor rights, will necessarily be gradual” in poor countries, the top civil servant in Bangladesh’s Commerce Ministry said at a March hearing held by the trade representative’s office.

Bangladesh’s garment sector represents roughly $19 billion in annual revenue and employs nearly four million workers, most of them women. It sells more than $4.5 billion worth of goods to the United States each year.

American trade officials say their frustration was growing even before the recent disasters.

“This has been a long process of one step forward, two steps backwards,” said an official from the United States trade representative’s office, who was not authorized to speak on the record. The official added that Bangladesh had its trade status reviewed previously in 1990 and 1999 for many of the same labor violations that remain problems now. The trade status was not revoked because the Bangladeshi government made commitments to improve, the official said.

In 2007, the A.F.L.-C.I.O. petitioned the United States trade representative to take a tougher posture toward the Bangladeshi government by revoking the country’s trade benefits.

“If the country improves and enforces its own laws, real change can happen for these workers,” Cathy Feingold, international director of the A.F.L.-C.I.O., said Thursday.

One of the biggest concerns among American officials has been the treatment of Bangladeshi labor activists.

Last April, Aminul Islam, a prominent worker advocate, was found dead, his body bearing signs of torture. Reporters in Bangladesh said there was evidence that the government’s security forces might have been tied to the death. No one has yet been arrested. According to American diplomats and labor officials, there has been little progress in the investigation.

US retailers to forge new safety plan for Bangladeshi apparel factories   [ top ]

BOSTON GLOBE, Steven Greenhouse, May 31, 2013
Feeling pressure from consumer and labor groups for not doing more to ensure factory safety in Bangladesh, Walmart, Gap and numerous other retailers along with the nation’s main retail federations are seeking to forge a new plan to promote safety in that country’s apparel industry.

This effort, to be spearheaded by the Bipartisan Policy Center, a nonprofit group based in Washington, was announced on Thursday, 2 1/2 weeks after dozens of retailers and apparel companies, almost all of them European, announced a far-reaching plan aimed at ensuring factory safety in Bangladesh.

As part of the new effort, the National Retail Federation, the American Apparel and Footwear Association as well as Gap, JCPenney, Sears, Target, Walmart and other retailers, will seek to “develop and implement a new program to improve fire and safety regulations in the garment factories of Bangladesh,” according to the Bipartisan Policy Center.

This effort will be led by two prominent members of that group, former Sens. George J. Mitchell, a Democrat, and Olympia J. Snowe, a Republican, both from Maine.

But some labor advocates called the effort divisive and a sham.

After a factory building collapsed in Bangladesh on April 24, killing at least 1,127 workers, Western retailers faced more pressure than ever to take action to ensure factory safety in that country, the world’s second-largest apparel exporter after China. In response, H&M, Carrefour, Marks & Spencer and more than two dozen other European companies backed a binding plan in which they agreed to rigorous independent inspections of the factories they use in Bangladesh and to help finance improvements for fire and building safety.

Only a few U.S. retailers signed on, however. On Thursday, Sean John, the fashion company run by Sean Combs, announced that it would become the third U.S. company to join, following PVH, the parent company of Calvin Klein and Tommy Hilfiger, and Abercrombie & Fitch. Loblaw, a Canadian retailer that produces the Joe Fresh clothing line, has also joined that plan.

With about 40 companies signed on to that plan, Gap, the Children’s Place and several other U.S. retailers have faced protests and a flood of Facebook posts, urging them to join.

Bill Chandler, a Gap spokesman, welcomed the new policy center effort. “We see the American alliance as a powerful path forward,” he said.

Jessica Deede, a Target spokeswoman, said, “We have been engaged with the Bipartisan Policy Center’s initiative as a potential solution.”

The center said Mitchell, Snowe and the North American retailers would seek to release their plan by early July. The effort also includes the Retail Industry Leaders Association and the Retail Council of Canada.

In assessing the new plan by U.S. retailers, Richard M. Locke, an expert on overseas manufacturing at the Sloan School of Management at MIT, said, “I think they must be feeling the heat because people are asking them, ‘Why don’t you join this other initiative?’”

Locke added: “The idea that you would bring all these people together in this new effort is a good first step. But I don’t think it’s good to have competing initiatives.”

Philip J. Jennings, general secretary of Uni Global Union, a worldwide federation of 20 million retail and service workers that helped develop the initial Bangladesh factory safety plan, criticized the new effort.

“It’s a sham,” he said. “There is no valid reason why they can’t join the initiative we have launched. It has been well received,” he said, adding, “Now they seem to want to paddle their own canoe on their own terms.”

Officials from several U.S. retailers have voiced concern that their companies would face large legal liability if they were to join the European-dominated plan. But several backers of that accord say the Americans are shying away because they dislike the binding obligations and potential costs of the plan.

On Wednesday, officials from Walmart, Gap and several other retailers met in New York to begin moving ahead with the policy center plan. Kevin Gardner, a Walmart spokesman, lauded the effort, saying, “There is a need to partner with other stakeholders to improve the standards for workers across the industry.”

Scott Nova, executive director of the Worker Rights Consortium, a factory monitoring group, said the new effort would “contain no real obligation on the part of brands and retailers to pay for the building renovations necessary to convert deathtraps in Bangladesh into safe factories.”