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Gap Wants Changes to New Safety Deal

Gap is refusing to sign on to a new safety agreement in Bangladesh, and Walmart is mute on the topic. Gap is calling for modifications to the dispute resolution aspect of the agreement.

In a statement released May 13th, Gap said, “Gap Inc. is ready to sign on today with a modification to a single area — how disputes are resolved. This proposal is on the table right now with the parties involved.  With this single change, this global, historic agreement can move forward with a group of all retailers, not just those based in Europe.” PVH, which has signed the agreement, is a U.S. based company.

Sources indicate that the agreement is already finalized, so it is unlikely that Gap will get the changes it is requesting. The organizing retailers set a deadline of May 15th for signers.

H&M, PVH, Tchibo, Inditex, Primark, C&A and Tesco have all joined the accord, which aims to establish an in-factroy training program, create factory health and safety committees, review building regulations and enforcement, create a mechanism for workers to report health and safety risks, and develop a worker complaint process. It is this last point – worker input – that Gap takes issue with.

The agreement evolved from the Bangladesh Fire and Safety Agreement, which Walmart in particular was harshly criticized for scuttling prior to the Tazreen Fashions Fire in November. Walmart refused to sign on to that deal because it required capital improvements for factories that brands and retailers do not own.

Gap’s statement also highlighted their efforts in Bangladesh, pointing out that the firm has committed up to $22 million for improvements to factories. They currently contract with 78 factories in the country.

Li & Fung is continuing to look at the pact. That firm supplies dozens of retailers, but has declined to give details. Bangladesh is the second largest component of Li & Fung’s sourcing mix, after China.

“We don’t think the answer is to move away from Bangladesh,” Bruce Rockowitz, Li & Fung’s group president and chief executive, told reporters after a shareholder meeting in Hong Kong on Tuesday. “The answer is actually to invest more and try to make safety better and work with the government on doing a better job of monitoring buildings.”

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