July 13, 2013
A transatlantic divide among big companies may hinder efforts to improve workers’ safety in Bangladesh
THE message was unequivocal from the bosses of 17 North American retail chains, including Walmart and Gap, when they launched the Alliance for Bangladesh Worker Safety on July 10th. They called the record of Bangladeshi factories “unacceptable” and said that improving it “requires our collective effort”.
After 1,129 people died in a factory collapse at Rana Plaza on the outskirts of Dhaka on April 24th, and subsequent reports that many other factories in Bangladesh were in a dangerous condition, the need for collective action seems clear. So why are North American retailers pursuing their own action plan, rather than joining the Accord on Fire and Building Safety in Bangladesh, launched on May 13th and now supported by 72 big clothing retailers—mostly from the European Union?
In most respects the North American alliance’s promises differ little from those of the European accord. The alliance, brokered by two former senators, George Mitchell and Olympia Snowe, calls for all Bangladeshi factories used by the retailers to be inspected within a year, with the results published and a boycott imposed on any that failed their inspections. The factories’ workers will get safety training and a hotline to report any worries. So far the North American retailers have agreed to provide grants of $42m and $100m in low-interest loans to upgrade factories.
The European accord is along similar lines, except that it is legally binding, whereas the alliance deal is not. “We don’t believe that unenforceable commitments are credible,” says Scott Nova of the Workers Rights Consortium, an NGO that helped create the accord. Retailers in the North American alliance insist they are serious about improving worker safety too, but would face a greater risk of costly and frivolous litigation if they signed the legally binding agreement. “If you have to find $10m for factory safety and put aside another $10m for lawyers, you will really start to suck the energy out of this,” says Jay Jorgensen, a Walmart executive.
This is debatable, especially given recent court rulings that seem to have watered down the Alien Tort Claims Act, a law that might have put the retailers at risk. Even before this there had been few successful cases: it has been “the dog that didn’t bark,” says Aron Cramer of Business for Social Responsibility, another NGO.
To underline his concern about Bangladesh’s factories, President Obama has suspended the country’s trade privileges under America’s Generalised System of Preferences. This was largely a symbolic move, since garments are not covered by the scheme. But if the EU were to follow, it would be more serious for Bangladesh, since it sends 60% of its clothing exports to Europe, where they enjoy big trade perks. This week, however, the EU expressed satisfaction at the retailers’ accord, and announced a deal of its own to improve workers’ safety, with the UN’s International Labour Organisation and the Bangladeshi government.
At the launch of the alliance Mr Mitchell, whose previous achievements include brokering peace in Northern Ireland, said he expects that its differences with the accord will become less significant over time. Mr Cramer, however, worries that the differences will provide opportunities for factory owners to wriggle out of complying.
Foreign firms have been promising for around 20 years to do something about Bangladesh’s dangerous factories, to little effect. Now, as then, they will make significant progress only if the government, and the factory owners, also undertake serious efforts to bring about change. Lamentably, even after the tragedy at Rana Plaza there has been little sign of this.