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U.S. urges companies to join Bangladesh safety pact

(MoneyWatch) Even with global apparel companies recently joining a pact pledging to improve worker safety in Bangladesh following a deadly factory collapse, The Gap (GPS) and Wal-Mart (WMT) remain high-profile holdouts despite prodding by the U.S. government.

Speaking in Bangladesh on Monday, Under Secretary for Political Affairs Wendy Sherman said the U.S. would continue its efforts to get all companies that purchase goods from Bangladesh to agree to common worker safety guidelines. "The buyers have a critical role. We will continue to work in every way to get the buyers to come to the table and every appropriate way to play the part that they must play for a sustainable solution," she said.

Sherman said efforts by outside companies were essential if there was to be any improvement in the safety of people who must work in "sweatshop" conditions and are paid less than $40 a month.

Gap and Wal-Mart are the biggest American companies that haven't signed an agreement under which apparel companies that make clothes and other products in Bangladesh vowed to fund fire and other safety improvements to factories in the country. The agreement, which was proposed in April by Bangladeshi and international labor unions, has drawn worldwide support after the deaths of more than 1,100 people in the collapse of a garment factory.

Both Gap, which does business with 78 Bangladeshi factories, and Wal-Mart have refused to sign the accord because of concerns about the companies' legal liability.

At Gap's annual general meeting last week, CEO Glenn Murphy said the company was still in discussions over the agreement. The pact would make retailers subject to binding arbitration enforceable in the courts of the country where the company is headquartered.

"We've not given up that a global accord of some kind can be worked out," Murphy told shareholders, while adding that the current proposal does not "make sense" for the company.

The unions behind the plan say it isn't too late for Gap and other companies to sign the agreement.

"Gap has a reputation as being ethical, with strong leadership in corporate social responsibility," said Jyrki Raina, head of IndustriALL Global Union, one of the labor groups behind the safety agreement. "Today it has a golden opportunity to show this reputation is genuine and not just a part of its $600 million PR campaign. Gap should act and join the Accord. It is not yet too late to reassure investors and shoppers it's ready to do the right thing."

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