North American pact for Bangladesh factory safety

A clothing tag is seen amid rubble after A clothing tag is seen amid rubble after an eight-story garment factory collapsed, killing more than 1,100 people in Bangladesh earlier this year. (May 5, 2013) Photo Credit: AP

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Nearly 20 North American retailers and clothing makers have agreed to a five-year pact aimed at improving safety conditions at Bangladesh factories. The group's agreement seeks to spread accountability across a wide spectrum from the local government to factory owners.

As part of the pact, the group -- which includes Wal-Mart 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 be made public. They will then develop action plans for the factories that need improvement.

The alliance has provided $42 million so far in funding. 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.

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 in the history of the garment industry, came just months after a fire in another garment factory in Bangladesh in November killed 112.

The accord, announced Wednesday at a news conference in Washington, comes as U.S. 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 initially had 30 companies on board. More details of that accord were announced Monday.

U.S. retailers say they're averse to that agreement because they believe it exposes them to unlimited liability and the pact sought major funding by private businesses without providing accountability for how the money is spent. The few U.S. companies committed to the global accord include PVH Corp., the New York parent company of Tommy Hilfiger and Calvin Klein, and New York fashion company Sean John.

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