Twenty-five-year-old Razia is one of 2,500 survivors of the factory collapse in Bangladesh. Credit: Naimul Haq/IPS

By Carey L. Biron
WASHINGTON, Jul 11 2013 (IPS)

An alliance of 17 major U.S. brands and retailers, including Walmart and the Gap, has unveiled a five-year agreement aimed at strengthening conditions and worker rights at garment factories in Bangladesh.

The new alliance, announced here in Washington on Wednesday, received cautious initial approval from some sectors. Yet the response from labour rights groups has been excoriating, with advocates particularly warning that the agreement’s enforcement provisions are too weak to ensure robust implementation.

“The so-called Global Alliance for Bangladesh Worker Safety was developed without consultation with workers or their representatives and is yet another ‘voluntary’ scheme with no meaningful enforcement mechanisms,” Richard Trumka, president of the AFL-CIO, one of the largest labour unions in the United States, told IPS in a statement.

“Companies that sign onto the alliance but fail to meet a commitment face no adverse consequences beyond expulsion from the scheme. Instead, workers will continue to pay.”

Indeed, according to a joint response by a half-dozen labour rights groups (not including the AFL-CIO) shared with IPS, companies that decide to withdraw from the alliance are only penalised by being forced to pay their share of administrative costs. For large companies, this would work out to around five million dollars – while Walmart alone brings in more than 400 billion dollars annually.

“For a company with billions of dollars in revenue, such a penalty is a minimal cost of doing business, not a serious deterrent,” the groups, which include the International Labor Rights Forum, the Worker Rights Consortium and others, stated.

“This confirms what labor rights advocates have long predicted: that Walmart, Gap and companies like them simply do not want to make any promises they actually have to keep. What they want is to be able to make promises now, at a time of major public and media scrutiny, that they can walk away from whenever it suits them, at a token cost.”

The creation of the new alliance follows a five-week process of negotiations among the companies and two and a half months after a factory collapse in Dhaka killed more than 1,100 people, the worst disaster in the garment industry’s history.

Fear of liability

But the agreement also comes after nearly 70 other companies, primarily in Europe, agreed to support a new fire and building safety accord that has won widespread approval from labour groups. Nearly all major U.S. and Canadian companies refused to sign onto the accord, however, saying it would open them up to too much legal liability.

“The main … reason we couldn’t sign the accord, is Europe has a different legal environment than we do in the United States and Canada,” Jay Jorgensen, Wal-Mart’s senior vice president and global chief compliance officer, said at the public unveiling of the new agreement here on Wednesday.

“The accord had some provisions that under the U.S. and Canadian legal system would subject us to potentially unlimited legal liability and litigation … These companies here have put up around 146 million dollars so far to fix the situation in Bangladesh – we don’t want one dollar of that to go to lawyers; we want every cent of that to go to the factories.”

The alliance also includes such major retailers as Target, Macy’s, Nordstrom, Kohl’s, Sears, L.L. Bean and J.C. Penney.

Under the terms of the new agreement, by October a common set of safety standards will be created for all factories producing products for alliance members. After one year, those factories will have to undergo an external verification process, by auditors chosen by the companies.

The alliance also says that worker empowerment will play a key role in its new approach, promising to institute, among other things, new worker representation committees. Yet critics point out that the alliance agreement makes no provision under which workers can refuse to do dangerous work.

Further, while an alliance hotline for worker complaints is to be set up by November, the European accord goes much farther, allowing workers to initiate enforcement proceedings.

Thus far, alliance members have pledged 42 million dollars to a worker safety fund, and have said they will provide more than 100 million dollars in capital for improving factory infrastructure. Those contributions are to continue for the next five years, though critics warn that this aspect of the plan is only voluntary.

Aligning goals

Initially it had seemed as though the North American companies, in refusing to sign the European accord, would simply proceed with individual plans for remediation in Bangladesh and public relations elsewhere.

Yet as analysts were suggesting that Bangladeshi-made clothing might soon become taboo to consumers, in early June several of the largest companies here agreed to negotiations hosted by the Bipartisan Policy Center, a Washington think tank.

Over the past five weeks, these talks were led by two widely respected former U.S. senators, George Mitchell and Olympia Snowe. While both Wednesday offered their support for the results, the spectre of the European accord clearly remains foremost in many minds.

“Before they began this process, the members of the alliance decided that they would not join the accord, so this was not and is not a question of the alliance versus the accord,” Mitchell said Wednesday.

Yet he noted in closing: “My hope, and here I speak personally, is that the members of the alliance and the accord will one day soon make their efforts common to the extent possible. The criterion should be simply, what’s the best way to improve worker safety.”

Indeed, harmonising the two approaches appears to remain an important medium-term goal, at least for some. Also speaking Wednesday, Snowe noted that the new agreement was “designed to work in conjunction with the accord”, including though the establishment of a joint advisory board that “can hopefully align their goals”.

That sense is shared by some U.S. lawmakers, many of whom in late June withdrew lucrative trade concessions to Bangladesh – though not those that would impact on the massive garment industry, which is expected to be valued at some 21 billion dollars this year.

“The creation of the Alliance for Bangladesh Worker Safety is an important first step toward addressing the dismal plight of Bangladeshi garment workers,” Senator Robert Menendez, chair of the powerful Senate Foreign Relations Committee, said Wednesday.

“[But] 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.”

Labour groups here are stepping up pressure on U.S. firms to sign a binding building safety agreement for Bangladeshi factories after 10 major European garment companies signed onto the landmark agreement.

H&M, a major European apparel chain, signed the agreement Monday, and Benetton, which was under fire from activists after their clothing was found in the ruins of the Rana Plaza factory which collapsed in late April, signed on Tuesday.

The ruins of the eight-story Rana Plaza factory. Credit: Rijans/CC BY-SA 2.0

The nearly month-long search for victims in the wake of the Rana Plaza collapse ended Monday, after the death toll had reached 1,127.

“H&M’s decision to sign the accord is crucial,” Scott Nova, executive director of the Worker Rights Consortium (WRC), an independent labour rights watchdog group based in Washington, said in a press release.

“They are the single largest producer of apparel in Bangladesh, ahead even of Walmart. This accord now has tremendous momentum.”

Other European companies that signed the accord, known as the Bangladesh Building and Fire Safety Agreement, included Inditex, C&A, Primark and Tesco. By Tuesday evening, the only U.S. company to agree to the accord was PVH, the parent company of Tommy Hilfiger and Calvin Klein, which signed last year.

According to the International Labor Rights Forum (ILRF), an advocacy organisation, the new agreement covers all major areas needed to ensure its effectiveness: “independent safety inspections with public reports, mandatory factory building renovations, the obligation by brands and retailers to underwrite the cost of repairs, and a vital role for workers and their unions”.

The pact also calls for participating companies to pay up to 500,000 dollars a year toward building maintenance and safety in Bangladeshi factories, to bring them up to a specified standard. According to Liana Foxvog, ILRF communications director, the associated costs would translate into about ten cents per garment.

The agreement between several major European companies has also been significant in that it now focuses a spotlight on the relative inaction of their U.S. counterparts – and narrows and intensifies the pressure from labour groups on U.S. companies to sign the pact.

“The fact of European brands signing on is very important for the Bangladesh garment industry,” Foxvog told IPS. “It’s time for U.S. companies to sign on as well.”

Labour groups are particularly focused on Walmart and Gap, two of the largest and most influential companies that source from factories in Bangladesh. Foxvog said that “If Gap changes its mind, we expect that more U.S. companies will sign on.”

Gap, which was close to signing the agreement last year before starting its own non-binding, voluntary agreement with factories in Bangladesh in October 2012, said Monday that the company was concerned about possible “legal liability” issues that could arise.

The company said Tuesday that it was “six sentences away” from signing the accord and would accept if those proposed sentences, which lessen its liability concerns, were accepted.

But critics say such arguments have little substance behind them.

“They’re nonsense,” WRC’s Nova told IPS. “Ask Gap wherein the legal liability lies; ask them to point to the language in the agreement that creates legal liability for them – they can’t do it. What Gap wants is an agreement that can’t be enforced. The stuff about legal liabilities is a ruse.”

Foxvog expressed similar sentiments.

“Gap is saying it doesn’t want to be held accountable for the working conditions (in the factories) and other commitments of the safety agreement,” she said.

Company-led change

Still, labour rights groups are growing increasingly optimistic, as companies seem to be facing increasing pressure to conform to multi-stakeholder agreements, and the Bangladeshi government has shown signs of committing to stronger labour standards.

On Monday, Bangladesh’s cabinet lifted restrictions on forming unions, reversing a 2006 law that required employees to obtain permission from an employer before organising.

And the previous day, the government set up a new minimum wage board that will include factory owners and workers, and government officials, and will recommend pay raises. However, the decision to implement these new standards will still need to be approved by the cabinet.

But for broader change, advocates argue that the active participation of multinational companies is key to bringing about permanent change in the Bangladeshi garment industry. Proponents are now hoping that the announcement by the 10 European companies – with more, perhaps, to come – could now create a transatlantic ripple effect.

“This is a really tremendous advance to have … global brands and retailers make a binding commitment to worker safety,” Judy Gearhart, executive director of the ILRF, said in a statement. “Now we need major U.S. brands and retailers such as Walmart, Gap, and JC Penney to join in the same agreement.”

Walmart has said its own safety plan meets or exceeds the building and fire safety code’s standards, but added that it would continue to discuss the plan.

Howard Riefs, spokesman for Sears, also a large producer in Bangladesh, said late Tuesday that while the company is still in discussions over the plan, it is not yet ready to sign on. JCPenney and The Children’s Place are also reportedly still evaluating the plan.

Last week, the ILRF and United Students against Sweatshops, an advocacy group, launched a new website, designed to ramp up pressure on Gap to sign the Bangladesh Fire and Building Safety Agreement.

“I find it hard to believe that Gap is irresponsible enough to continue on this course of action (of avoidance) any longer,” Nova told IPS.