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North American firms detail Bangladesh safety pact

Gap, Walmart, and Target are among the retailers that agreed to inspect all the factories they do business with.

Justin Sullivan/Getty Images

Gap, Walmart, and Target are among the retailers that agreed to inspect all the factories they do business with.

NEW YORK — A group of nearly 20 North American retailers and clothing makers has agreed to a five-year pact aimed at improving safety conditions at Bangladesh factories that seeks to spread accountability across a wide spectrum from the local government to factory owners.

As part of the pact, the group — which includes Walmart Stores Inc., Gap Inc., and Target Corp. — agreed to inspect all the factories they do business with within a year and set up basic safety standards within three months. They’re also requiring that the inspection results of the factories be made public. They will then develop action plans for the factories that need improvement.

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The alliance has provided $42 million in funding so far and said that figure is growing. The mandatory costs of the program for each company will depend on how much business each of the retailers does in Bangladesh, but will be capped at $1 million per year. Some companies will offer an additional $100 million in loans to help factories improve safety.

The pressure has been building for companies to step up their monitoring of factories in Bangladesh following a building collapse in April that killed 1,129 workers there. The tragedy, the deadliest accident in the history of the garment industry, came just months after a fire in another garment factory in Bangladesh in November killed 112 workers.

The accord, announced Wednesday at a press conference in Washington, comes as US retailers faced criticism for not joining a group of mostly European retailers in signing a separate safety pact that now has 72 companies involved. That global pact was announced in mid-May and had initially 30 companies on board. More details of the global accord were announced Monday after weeks of negotiations with worker rights groups and union groups.

US retailers say they are averse to that agreement because they believe it exposes them to unlimited liability. They also say the pact sought major funding by private businesses without providing accountability for how the money is spent. They also believed that it gave union groups too much power.

During the press conference, executives from Gap, Target, Walmart, and VF Corp. spent most of their time talking about the similarities of both plans. They said both emphasize collaboration, public reporting of factory inspections, and worker rights.

But they also said they want to work together with participants in the global accord to create uniform safety standards instead of competing ones.

The North American alliance covers about 500 factories and a majority of the clothing exports from Bangladesh to North American companies. The global pact covers 800 to 1,000 factories. About 25 percent of the garment exports from Bangladesh go to North America; the rest goes to Europe and other countries. There are about 5,000 garment factories in the country.

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