The agreement covers the majority of North American apparel imports from Bangladesh. But labor unions and an alliance of activist investors criticized the initiative as insufficient.
Bangladesh is the world’s second-largest apparel exporter, after China. It is estimated that 4.5 million people work in the industry, often under risky conditions. The Obama administration has taken the impoverished South Asian nation to task over concerns about labor rights and worker safety, announcing last month the suspension of trade privileges for Bangladesh.
Pressure on Wal-Mart and Gap, in particular, heated up after they refused to join an international accord to improve fire and building safety in Bangladesh in May. That agreement, known as the Accord on Fire and Building Safety in Bangladesh, was signed by 77 mostly European retailers and some American companies, such as Abercrombie & Fitch and PVH, the owner of the Calvin Klein and Tommy Hilfiger brands.
In addition to Wal-Mart and Gap, other North American alliance members include J.C. Penney, Macy’s, Target, Sears, Nordstrom and L.L. Bean.
Under their agreement, inspectors will prioritize factory safety risks and report any dangerous conditions to factory owners, independent worker committees, alliance members and Bangladeshi authorities.
The alliance limits the financial commitment of its biggest members to $5 million for a five-year period. In total, its members are committing $42 million, an amount they said “is growing,” while promising an additional $100 million in loans to factory owners in Bangladesh to assist with safety improvements.
The self-regulatory nature of the initiative has provoked criticism. Members of the Interfaith Center on Corporate Responsibility, a group of activist investors, found the initiative “lacking in sufficient worker protections and accountability mechanisms.”
Labor unions rejected the U.S. retailers’ plan as “weak and worthless.” In a joint statement, Richard Trumka of the AFL-CIO and Joe Hansen of Change to Win said the initiative is yet another “voluntary” scheme with no meaningful enforcement mechanisms. The AFL-CIO and Change to Win said they support the international accord instead, stressing its legally binding nature and the fact that unions and worker-rights organizations negotiated the agreement with employers.
The North American alliance also took input from worker-rights organizations. The AFL-CIO and Change to Win, however, “decided not to participate so that we would not be supporting or giving credence to what is considered a sham agreement,” said Change to Win spokesman Paco Fabian. They are calling for Wal-Mart and Gap to join the international accord “rather than trying to undermine those efforts and maintain a system that has a long and bloody record of failure,” their statement said.
There were calls from politicians in both the United States and Europe for the two initiatives to coordinate their efforts. Sen. Robert Menendez (D-N.J.) said that “North American and European retailers, which often source from the same factories, must now closely coordinate efforts on their various initiatives to ensure that there is a common unified safety standard going forward.”
Dutch trade minister Lilianne Ploumen also called for cooperation of the two alliances. Ploumen, who co-chairs a joint donor group to improve working conditions in Bangladesh, said it is important for the North American alliance to work closely with the safety inspector of the European accord “to ensure that we coordinate our efforts to improve worker safety.”
For their part, the chief executives of the North American alliance retailers said in a letter that they are “committed to working with other global brands in order to achieve swift change.”
The North American alliance was developed under the guidance of former U.S. senators George J. Mitchell and Olympia Snowe. Acting as independent facilitators at the Bipartisan Policy Center, Mitchell and Snowe will help provide independent verification of the program’s effectiveness over the first two years.