N. American retailers' pact on Bangladesh safety seen as inadequate

Critics say it falls short of European retailers' deal

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A new plan by Gap Inc., Wal-Mart Stores and other North American retailers to improve factory safety conditions in Bangladesh is being criticized for falling short of a pact reached by mostly European retailers.

A $42 million fund will be set up to implement the five-year plan that requires factories to be inspected within a year and for the results to be made public, the North American companies said Wednesday in an emailed statement. The Alliance for Bangladesh Worker Safety said it will set safety standards by October and refuse to buy from factories deemed unsafe.

In the North American pact, individual retailers can voluntarily pledge capital beyond the $42 million so factories can make safety renovations. By contrast, the plan joined by Hennes & Mauritz and Inditex, Europe’s two largest clothing retailers, obligates companies to ensure their factories have the capital to make necessary repairs.

“It’s disappointing that Wal-Mart, Gap, and other U.S. retailers have chosen to go their own way with a plan that appears to lack meaningful transparency and accountability,” New York City Comptroller John Liu said in a statement. What’s worse, “their plan risks diluting the effectiveness of a stronger, global effort to improve worker safety in Bangladesh’s factories.”

The North American retailers, who also include Target, J.C. Penney and Canadian Tire, have been working with industry associations and the nonprofit Bipartisan Policy Center to craft an alternative to a European plan for improving factory safety in Bangladesh. Both initiatives were started in the wake of the collapse of the Rana Plaza factory in April, which killed more than 1,100 people in the worst industrial accident in the country’s history.

“We all share a deep sense of collective responsibility to prevent the horrific loss of human life we’ve witnessed in Bangladesh from ever recurring,” former Sen. Olympia Snowe, R-Maine, who co-chaired the group’s talks, said in the statement. The agreement is “a substantive and timely step forward in protecting Bangladeshi workers.”

The accord signed by H&M and Inditex pledged at least $60 million over five years to monitor safety in Bangladesh plants.

In the North American agreement, each retailer’s financial contribution will correspond with the size of its operations in the country. Retailers with the most production will pay $1 million a year for five years. About 10 percent of the funds will support workers displaced by factory improvements or closings. Individual retailers also have committed more than $100 million for low-interest loans to ensure repairs occur quickly.

The retailers said they will select a non-governmental organization in the next 30 days to implement the program. Under the accord signed by the Europeans, a third party conducts factory audits. In the North American pact, retailers use an approved inspector while a third party conducts spot checks of remediation efforts and inspections.

The group’s board, which will be appointed in the coming weeks, will release semi-annual progress reports. Snowe and former Sen. George Mitchell will provide reviews of the program for at least the first two years.

Factory workers and managers will be required to undergo mandatory training. An anonymous hotline administered by a third party will be established by November, and worker committees to share safety concerns will be created at each factory, the companies said.

Bangladesh exported $21.52 billion in garments for the year ended June 30, according to the Bangladesh Export Promotion Bureau, a government run-agency. That compares with $18 billion in the previous year. The nation exports 60 percent of its apparel to Europe and 23 percent to the U.S, the bureau said this week.

The Worker Rights Consortium, a Washington-based labor- rights monitoring group, has previously said it would take billions of dollars to make Bangladesh factories safe.