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Apparel Factories Forced to Close in Bangladesh as Obama Administration Calls for Reforms

Monday, May 20, 2013
Sandler, Travis & Rosenberg Trade Report

[Editor’s note: The following article originally appeared in the May 16, 2013, issue of the Advisor, a weekly publication of the ST&R-TAP service, and is reprinted here with permission.]

Press reports indicate that more than 300 apparel factories on the outskirts of Dhaka, Bangladesh, were recently forced to shut their doors for an indefinite period of time due to continued worker unrest following the disastrous collapse of a nine-story building that killed a total of 1,127 workers, making it the deadliest industrial accident on record since the 1984 disaster in Bhopal, India. Meanwhile, the Bangladeshi government and some of the largest apparel companies doing business in Bangladesh have been looking for ways to improve worker safety in the country. Various sources note that earlier this week Bangladesh’s Cabinet approved an amendment to the country’s labor laws that will reportedly allow garment workers to organize themselves into unions without prior employer approval.

At the same time, some of the largest companies sourcing apparel from Bangladesh – including H&M, Inditex and Phillips Van Heusen – have committed to support an Accord on Fire and Building Safety in Bangladesh initiated by IndustiALL Global Union and UNI Global Union. According to a press release by Inditex, this agreement is “designed to enhance health and safety conditions in the textile industry in Bangladesh by leveraging the commitment pledged by the various players involved in this Asian economy’s textile industry.” PVH notes in a separate press release that the agreement “expands to five years (from two) a fire and building safety program to be led by a multi-stakeholder task force for the purposes of establishing an in-factory training program; facilitating the creation of factory health and safety committees; reviewing existing building regulations and enforcement; developing a worker complaint process and mechanism for workers to report health and safety risks; and advising a lead Safety Inspector.” A copy of the accord is available on the ST&R-TAPTM TRADE LIBRARY.

The Obama administration has also exerted some pressure on U.S. apparel importers to actively contribute to improving the work safety and labor climate in Bangladesh. Officials from the State Department, the Office of the U.S. Trade Representative and the Labor Department urged U.S. buyers in a May 8 conference to coordinate efforts with each other, the government of Bangladesh and the Bangladesh Garment Manufacturers & Exporters Association, as well as civil society and labor groups, on factory safety and fire initiatives. The Bangladesh factory collapse was also a subject of high-level discussion at last week’s board meeting of the U.S. Association of Importers of Textiles and Apparel.

While the impetus exists for action among importers, the U.S. industry’s options are somewhat limited. A legal source noted that retailers would be unlikely to reach some sort of industry agreement to end sourcing from Bangladesh unless there are certain advancements in labor standards. Moreover, this source claimed that the “legislative leverage is very low” in the U.S. given that textile and apparel products are excluded from the scope of the Generalized System of Preferences.

Efforts by administration officials to spur importers into action come on the heels of a May 1 letter to President Obama from House Ways and Means Committee Ranking Member Sander Levin and House Education and Workforce Committee Ranking Member George Miller urging the U.S. and the EU to adopt a common response to the disaster. Rep. Miller has also called on certain retailers to sign on to the Accord on Fire and Building Safety in Bangladesh.

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