70 retailers agree to new Bangladesh factory safety pact

About 70 Europe-based retailers have signed on to an international pact designed to improve working conditions and safety standards in Bangladeshi clothing factories.

Agreement lacks U.S. clothing retailers, but they say a separate deal is in the works

About 70 Europe-based retailers have signed on to an international pact designed to improve working conditions and safety standards in Bangladeshi clothing factories.

Swedish chain H&M, Italy's Benetton and Paris-based Carrefour are some of the larger names spearheading the agreement, which pledges to make them responsible for ensuring changes are made at the factories that produce their garments.

In April, more than 1,100 workers in a Dhaka-area garment factory were killed when the building collapsed. The building lacked emergency exits and had several floors that had reportedly been added illegally and compromised the integrity of the structure.

The tragedy focused worldwide attention on the sorry state of many Bangladeshi garment factories and the generally hazardous working conditions in the textile industry.

Retailers to cover costs of inspections, training

The deal will make retailers financially liable for all costs associated with improved inspections, training and other programs needed at factories found to be in disrepair.

Any facilities deemed unsafe will be immediately shuttered, and the workers there will be able to refuse to enter the building, without being in danger of losing their jobs. They will also be paid while repairs are underway.

Around 30 retailers expressed an interest in the pact as early as May. By Monday, that figure had jumped to more than 70 as details emerged that the first phase of the legally binding five-year plan will reportedly be completed by the end of 2013.

"Our mission is clear: to ensure the safety of all workers in the Bangladesh garment industry," said Jyrki Raina, general secretary of IndustriALL Global Union, a Geneva-based labour union involved in the negotiations.

The European Union imported more than nine billion euros ($12.2 billion) worth of goods from Bangladesh in 2012, more than 90 per cent of which were textiles.

More changes coming

Although heralded as a major change, only about one-fifth of the more than 5,000 garment factories in Bangladesh will be included in the new standards plan.

The pact also has a notable flaw in that not many American retailers have signed on. Tommy Hilfiger and Abercrombie & Fitch are among the few U.S. companies that have agreed to adhere to the terms. Larger retailers are wary that the terminology in the agreement makes them liable to pay out damages for any future disasters and doesn't set enough limits on this liability.

Large U.S. chains such as Wal-Mart, Target, The Gap and others are reportedly close to signing a separate deal that promises to improve conditions in their Bangladeshi factories and which could be announced later this week.

According to the Worker Rights Consortium, the administrative costs per company for the European deal will be about $500,000 US per year. Other estimates suggest all factories in Bangladesh could be improved to a suitable level for an additional $600,000 per factory.

Some of the money from the deal announced Monday will be used to quadruple the number of building inspectors that the Bangladeshi government employs.

"We have a carrot and a stick, but I prefer to use the carrot," the EU trade commissioner Karel De Gucht told Reuters. "We want to help the Bangladeshi people, not to punish them."

With files from Reuters and The Associated Press