Experience from Bangladesh with ethical trading initiatives

Since the 1990s there has been increasing concern in the North about products from the South and the conditions under which they are produced. In least developed countries labour conditions are considered to be at a very low level. Ethical trading initiatives, where importers impose codes of conduct on producers supplying Northern markets, are aiming at improving working conditions in factories in the South. This study uses the example of the ready made garment sector in Bangladesh to go through and evaluate the process of codes implementation. It also looks at the impact of ethical trading initiatives in Bangladesh. Based on interviews with Bangladeshi producers and importers with experience from Bangladesh, the study produces a set of recommendations for codes implementation. This includes the process of elaborating and presenting the codes, auditing the firms and making a corrective plan. In Bangladesh ethical trading has had a positive impact on the workers in factories that are compliant with codes of conduct. Working conditions have improved in large factories that receive direct orders from retailers. But small and medium firms, often operating as subcontractors, find it too expensive to comply with the codes. They are losing out in competition with larger factories, where costs of compliance are easier to handle. Many workers have lost their jobs as a result of this. Due to ethical trading there seems to be a change in importing strategies towards larger factories and longer lasting trading relationships. But this change in strategy can also be explained by an increased preference among importers for higher quality products.