There could be sanctions and fine if EU trade regulations not followed

The officials in the Dhaka mission of the European Union said Bangladesh will have to follow due diligence regarding human rights and protecting the environment. Otherwise the brands could be compelled to sever ties with the concerned establishments through imposing sanctions and realising fines.

The local producers, however, think the number of rules is too many and the cost of following those is too high. That is why they demanded a fair price from the buyers.

The businesspersons from the readymade garments sector said this at a roundtable, on following the laws appropriately, organised at the city’s Tejgaon area Tuesday.

International Business Forum of Bangladesh (IBFB) organised the roundtable, where Charles Whiteley, Ambassador and Head of Delegation of the European Union to Bangladesh attended as the chief guest. IBFB president Humayun Rashid chaired the meeting.

Deputy head of the EU mission, Bernd Spanier, presented the keynote while Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Faruque Hassan, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) executive president M Hatem, Bangladesh Textile Mills Association (BTMA) president Mohammad Ali Khokon and IBFB vice-president MS Siddiqui were the discussants.

The EU member states have prepared a cluster of rules regarding human rights and protection of the environment. Sanctions or a large sum of fine could be used on anyone, be it the producer, buyer and brands who would violate the rules.

Speaking at the roundtable, EU ambassador Charles Whiteley said the prepared due diligence is not a matter of the buyer and seller only; rather this is for all the people involved with the supply chain. The due diligence include child labour, forced labour, slavery, forest destruction, harming the ecosystem and violation of human rights. That means these are not the interests of the EU only, rather global interests are connected to these.

Charles Whiteley stated Bangladesh will have to pass through several processes to graduate from least developed countries by 2026. That is why it would be advisable to consider the due diligence law as something separate, he insisted.

The EU ambassador said there are around 32 conventions related to this. Bangladesh will not only have to ratify them, but also implement them.

Addressing the roundtable, BGMEA president Faruque Hassan said several EU countries adopted several rules regarding doing business in the last few years. They need to review the rules separately even though the synopsis of those are almost identical. “Undoubtedly this is not sustainable both from the point of view of time and money. So the laws should be universal and applicable globally.”

Faruque Hassan further said Bangladesh’s apparel sector follows sustainable and ethical practices.

He emphasised that the support of both the buyers and sellers is required to make this process a success.

The BGMEA president said the buyers have an informal competition of paying lesser prices for the products which is unwarranted.

In his keynote Bernd Spanier said many of the global supply chains do not follow the rules due to weak local rules and unhealthy competition of taking supply orders at lower price. We have seen irresponsible behaviour of several brands and buyers following the Rana Plaza collapse in Bangladesh and during the Covid-19 days. Those incidents remind us that the business enterprises do not abide by the rules on their own. That is why good governance is necessary in the supply chains sector. In this context, the EU has been implementing several laws that must be followed.

Due diligence compulsion will be implemented in two ways. Firstly , any victim could seek compensation from any specific company through the European court for failure to provide protection to human rights and environment. Secondly, designated EU authorities could observe on their own whether any one in the supply chains violated the laws. The EU authorities could impose any sanctions for failure to abide by the laws appropriately, with an economic value up to 5 per cent of the company’s global income.

IBFB vice-president MS Siddiqui, however, pointed out that it is not possible for a Bangladeshi producer to follow all the rules in the current economic scenario. He stated that social and environmental compliances vary in different parts of the world. In this competitive market, they have been selling products at the lowest price but the burden of rules is being thrown at them.

Reiterating the BGMEA president, the IBFB vice-president also put emphasis on the necessity of adopting a universal law bringing required amendments to them.

BKMEA president M Hatem also said the same. “We are being deprived regarding price all the time. The producers need to follow several types of audits to properly abide by the laws of buyer countries. This leads to more time and cost of doing business. The audit systems need to be unified.”

Responding to those, deputy head of EU mission in BAngladesh, Bernd Spanier, said the pricing is a matter of negotiation between the buyer and seller. They cannot force anyone in this regard.

EU ambassador Charles Whiteley lauded the proposal of a singular audit system. He said they would discuss this. “But Bangladesh must follow the rules of the supply chain,” he stressed.