CHICAGO/WASHINGTON (Reuters) - North American retailers unveiled a five-year safety plan for Bangladesh garment factories on Wednesday 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 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 (TGT.N) 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.
So far, $42 million has been raised for the North American project. Companies will contribute up to $1 million a year for five years based on how much they produce in Bangladesh.
Ten percent of the funds will be set aside to assist workers temporarily displaced by factory improvements or if a factory closes for safety reasons. The money will also support a non-governmental organization to be chosen within 30 days that will implement parts of the program.
The North American alliance’s plan, called the Bangladesh Worker Safety Initiative, was developed with assistance from former U.S. Senators George Mitchell and Olympia Snowe, who acted as independent facilitators at the Bipartisan Policy Center, a Washington-based think tank. The alliance has asked Mitchell and Snowe to verify the effectiveness of the program over at least the first two years.
The 17 current members of the alliance include: Canadian Tire Corp Ltd (CTCa.TO); Carter’s Inc (CRI.N); The Children’s Place Retail Stores Inc (PLCE.O); Gap Inc (GPS.N); Hudson’s Bay Co (HBC.TO); IFG Corp; J.C. Penney Co Inc (JCP.N); Jones Group Inc JNY.N; Kohl’s Corp (KSS.N); L. L. Bean Inc; Macy’s Inc (M.N); Nordstrom Inc (JWN.N); Public Clothing Co; Sears Holdings Corp (SHLD.O); Target; VF Corp (VFC.N); and Wal-Mart.
Hong Kong sourcing company Li & Fung Ltd (0494.HK), which does business with many of the companies involved, is serving as an adviser. Additional members are expected to join.
The North American alliance’s plan is also being backed by the American Apparel & Footwear Association, Canadian Apparel Federation, National Retail Federation, Retail Council of Canada, Retail Industry Leaders Association, and the United States Association of Importers of Textiles & Apparel.
Reporting by Jessica Wohl in Chicago and Doug Palmer in Washington; Editing by Jeffrey Benkoe