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North American Pact on Bangladesh Draws European Criticism

A North American alliance comprised of seventeen retailers and clothing makers agreed to a five-year pact intended to improve factory safety and working conditions in Bangladesh. The accord was reached in response to a building collapse in Bangladesh last April that resulted in the deaths of 1,129 workers, the deadliest single accident in the history of the garment industry ever recorded. The tragic incident came only months after a fire consumed another garment factory there, killing 112 workers.

The agreement, which includes retail giants Target Corp., Gap Inc., and Walmart Stores, commits the signatories to inspect all of the factories with which they contract business within one year and establish a common set of safety standards within three months. It was also agreed that the results of all inspections would be made available to the public.

Each company involved is mandated to make a monetary contribution to the alliance’s common fund, with each specific contribution to be determined on an individual basis. The more business a company does in Bangladesh, the more it will be required to add to the fund; however, the individual burden is capped at $1 million per year. The alliance has already collected $42 million and some retailers, including Gap Inc., have pledged an additional $100 million for low-interest loans aimed at expediting the repairs of structurally unsound factories.

The North American alliance has come under withering criticism from its European counterpart, deepening an already contentious cleavage between the two. Some have argued that the US consortium of companies have produced an accord too weak to prove effective. New York City Comptroller John C. Liu said, “It’s disappointing that Walmart, Gap and other US retailers have chosen to go their own way with a plan that appears to lack meaningful transparency and accountability.” He went on to explain that “their plan risks diluting the effectiveness of a stronger, global effort to improve worker safety.”

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Instead of kicking in contributions curtailed to the size of each company’s commercial commitments in Bangladesh, each member of the European alliance will dispense a minimum of $60 million over the next five years. Also, while the European led accord covers close to 1,000 factories the US led one covers about 500. Approximately 25 percent of Bangladesh’s textile exports head to North America while Europe and the rest of the world consume the remainder.

Walmart’s global chief compliance officer defended the North American agreement against European judgement: “I’m in no way critical of the work that the European retailers are putting in–what they’re doing is strong. But I disagree with assertions that we’re not as strong. We are.”