North American and European retailers announced Wednesday that they had agreed on fire and safety inspection standards for up to 2,000 factories in Bangladesh that supply such retailers as Gap (NYSE:GPS), Wal-Mart (NYSE:WMT) and H&M.
The European and North American groups agreed to streamline standards for inspector qualifications and monitoring requirements, but tensions between them remain high, with both parties disagreeing on how to finance safety upgrades.
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European retailers have agreed to finance fire and safety reforms for buildings that do not meet requirements, while the North American group - Alliance for Bangladesh Worker Safety - pledged $100 million in loans to factory owners to finance safety upgrades.
"The reason garment factories continue to be unsafe is not for a lack of common standards. It is because the monitoring visits carried out by brands were not conducted by competent engineers, not done in manner that is transparent, and did not include any commitment by brands and retailer to finance repairs," said Theresa Haas, a spokeswoman for the Worker Rights Consortium, a labor rights group that is a member of the European-led Accord on Fire and Building Safety in Bangladesh.
"It's up to the factory owner to decide if they want to remediate. We can't force them to make these changes," said Jeffrey Krilla, president of the American-led alliance, who called the agreement a huge step forward.
Individual retailers can voluntarily pull out of factories that do not meet safety requirements.
The new agreement comes as hundreds of workers take to the streets, demanding higher wages in protests that resulted in the death of least two workers and suspended production in up to 200 clothing factories.
Bangladesh garment factory working conditions have been under close scrutiny since the April collapse of the Rana Plaza factory complex killed more than 1,100 garment workers and a November 2012 fire at the Tazreen factory killed 112 workers.
Rock-bottom wages and trade deals with Western countries have helped make Bangladesh the world's second-largest apparel exporter after China, with 60 percent of its clothes going to Europe and 23 percent to the United States.
"When public commitment to workers rights comes into conflict with supply chain practices, inevitably workers lose out because brands are not willing to make necessary commitments including funding that will ensure industry reform," Haas said.
(Reporting by Marina Lopes; Editing by Steve Orlofsky)