North American group sets Bangladesh factory safety plan

Author: AJOT | Jul 10 2013 at 08:00 PM | Category: International Trade  

North American retailers unveiled a five-year safety plan for Bangladesh garment factories that would include inspecting within a year every factory they use, following tragedies such as April’s deadly garment building collapse.

The North American plan was immediately criticized by groups that think a European-led plan is stronger.

The plan announced in Washington, D.C. by the Alliance for Bangladesh Worker Safety, which includes 17 retailers and apparel companies, comes after 1,129 workers were killed in the collapse of a Bangladesh garment plant in April, and another 112 people perished in a fire at a Bangladesh factory in November.

A larger number of mainly European retailers that have signed what is known as the Accord on Fire and Building Safety in Bangladesh announced a similar plan on Monday. [ID:nL5N0FB2IK] Both plans include factory inspections, worker training and ways for workers to report safety concerns. The two groups also agreed not to use factories considered to be unsafe.

Members of the Interfaith Center on Corporate Responsibility and long-term shareholders in apparel brands and retailers said the Alliance’s plan lacks sufficient worker protections and accountability mechanisms and called it a weaker alternative to the European-led accord.

European unions involved in the other accord, industriALL and UNI Global Union, called the North American alliance “another toothless” auditing program.

“This initiative is not serious,” said Tom Grinter, a spokesman for industriall.

More Than 500 Factoiries to be Inspected
More than four million people, mostly women, work in Bangladesh’s clothing sector, making it the second-largest global apparel exporter behind China.

The North American alliance plans to inspect the more than 500 factories its members get garments from within a year, while the European-led accord plans to have initial inspections at the factories its 70 members use within the next nine months.

“I think both plans are very strong and that we should work together going forward,” said Jay Jorgensen, Wal-Mart Stores Inc’s (WMT.N) global chief compliance officer. “Theirs doesn’t recognize the way the U.S. legal system works, which is why the vast majority here in the U.S. didn’t join.”

One of the main concerns North American parties had with the European-led accord was the use of a binding arbitration process that would be enforceable in the courts of the country where a company is domiciled. Binding arbitration typically restricts the ability of the parties involved to appeal any decision in court.

North American alliance members will be held legally accountable to the group. If they do not do the work they agreed to do, the board can kick members out, their funds will be kept by the alliance and companies can arbitrate to get back in, said Jorgensen, a member of the alliance’s nine-member board of directors.

Daniel Duty, Target Corp’s vice president of global affairs who is also on the alliance’s board, said that between the efforts of the alliance and the accord, the groups should be able to cover the majority of the factories in Bangladesh, more than the 500 the North American alliance plans to inspect.

Bangladesh’s Ambassador to the United States Akramul Qader welcomed the North American plan and said he was “glad that alliance members have expressed (their) intention to collaborate with the EU-based accord on fire and building safety.”

He also expressed hope the United States would quickly restore trade benefits that were suspended in late June because of the poor safety conditions in Bangladesh.

The U.S. decision set duties on about $35 million worth of ceramics, golf equipment, tobacco products and other goods from Bangladesh that previously entered the United States duty free.

The U.S. move does not directly affect Bangladesh’s multi-billion-dollar clothing exports, since garments are not eligible for U.S. duty-free treatment.