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Senate Panel Blasts U.S. Firms Over Bangladesh Accord

Sen. Robert Menendez, chairman of the influential Foreign Relations Committee, warned American companies to get their act together “sooner rather than later.”

WASHINGTON — U.S. retailers and brands came under fire in the Senate Thursday for refusing, with the exception of three companies, to sign a legally binding Bangladesh fire and safety plan.

Sen. Robert Menendez (D., N.J.), chairman of the influential Foreign Relations Committee, took a hard line against American companies that have formed their own alliance to tackle fire and building safety issues in Bangladesh after declining to sign an international accord, warning them to get their act together “sooner rather than later.”

The committee stepped into the controversy swirling around inadequate fire and building safety standards and enforcement in the Asian nation’s apparel industry in the wake of the Rana Plaza building collapse in April that has claimed 1,129 lives and a fire at Tazreen Fashions in November that killed 112 garment workers.

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“Why is it that only a handful of American retailers have signed on, but many more European companies have signed on to the IndustriALL accord?” asked Menendez, addressing the hearing, which included three Obama administration officials and an attorney representing major retail and apparel industry groups. “What confidence can you give me that there are serious efforts under way by American retailers to help improve labor conditions?”

Eric Biel, acting associate deputy undersecretary for international affairs at the Department of Labor’s Bureau of International Labor Affairs, noted that the Labor Department is not endorsing any plan, but said, “It is our hope that as some of the details become clearer [with implementation of the IndustriALL-led accord], maybe some of those concerns will be obviated and there will be momentum for additional [U.S.] brands to sign on, but they have to make their own determination.”

An alliance of North American retailers led by Wal-Mart Stores Inc. and Gap Inc. has declined to sign the IndustriALL Global Union-led Accord on Fire and Building Safety in Bangladesh, citing concerns over legal liabilities. The alliance is formulating its own safety plan, which it said it hopes to unveil next month.

Forty-three retailers and brands have signed the IndustriALL-led accord, but only three of them are from the U.S. — PVH Corp., Abercrombie & Fitch Co. and Sean John.

“While the U.S. retail and apparel industry shares IndustriALL’s goal of improving worker safety to make more tangible progress on the ground, U.S. companies have raised several concerns regarding the accord, including the vague and ambiguous terms which potentially hold unlimited legal liabilities,” said Johan Lubbe, who testified on behalf of the Wal-Mart/Gap-led alliance and is U.S. practice cochair for international employment law at the law firm Littler Mendelson. “The IndustriALL accord should not be viewed as the sole response and solution to the situation in Bangladesh. U.S. and Canadian companies have come together in alliance to develop a single, unified action plan that they believe will achieve immediate and sustainable long-lasting change for the garment industry in Bangladesh.”

Menendez pushed back and said, “At the end of the day, I get concerned when I hear about the industry’s unwillingness to join a more global standard. Regardless of whether it is Bangladesh today or some other place tomorrow, we have to have a global standard so that we don’t have a race to the bottom. I think Rana Plaza shows the limits of individual corporate responsibility campaigns.”

Menendez said the AFL-CIO’s petition seeking to revoke Bangladesh’s trade preferences under the U.S. Generalized System of Preferences has languished for six years, “giving us an example of how everybody turns a blind eye until something happens, and I can assure you something is going to happen,” he warned, unless the industry “gets its act together and establishes a standard.”

Celeste Drake, trade policy specialist at the AFL-CIO, said labor groups are concerned that the North American alliance plan will be voluntary, with no legally binding components. They are also concerned about having two separate accords.

“What we are really afraid of is that this new alternative plan with the Bipartisan Policy Center sounds good, but if it ends up being more corporate-directed social responsibility, but not giving workers the power to speak up for themselves and be monitors of their own health and safety, it simply is not going to work,” Drake said.

The administration officials said the Bangladesh government must take strong steps to show that it is seriously addressing the labor and safety issues in the garment industry, in order to retain its GSP benefits, which are in jeopardy and currently under review. They said the government has taken positive steps, such as agreeing to allow workers to form unions without factory owner approval and convening a commission to look at raising the minimum wage, which stands at $37 a month for garment workers, and committing to hiring more labor inspectors, up to 800 in the short term.

“We believe three key reforms are particularly important to improve workers’ lives in the near term — guaranteeing workers’ rights to organize, guaranteeing fire safety, and ensuring structural soundness of factories and other facilities,” said Robert Blake, assistant secretary of state for South and Central Asian Affairs at the State Department.

Lewis Karesh, assistant U.S. Trade Representative for labor, said administration officials have outlined specific concerns to the Bangladeshi government as part of the GSP review, including actions they should take to allow greater freedom of association, enabling workers to form and operate unions, and allowing nongovernmental organizations to assist them in ensuring they have safe factories in which to work.