U.S. companies detail Bangladesh safety pact

NEW YORK A group of 17 U.S. retailers and clothing makers have agreed to a five-year safety pact aimed at improving conditions at Bangladesh factories that calls for inspecting all factories that supply their garments within a year.

They're also agreeing to set up basic safety standards within three months.

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As part of the agreement, the U.S. companies including Wal-Mart, Gap and Target have provided a total of $42 million so far in funding and will offer an additional $100 million in loans to help factories improve safety.

The pressure has been building for companies to step up their monitoring of the factories in Bangladesh following a building collapse in April that killed 1,129 workers there. The tragedy, the deadliest incident in the history of the garment industry, came just months after a fire in another garment factory in Bangladesh in November killed 112 workers.

The accord, to be announced Wednesday at a press conference in Washington, comes as U.S. retailers faced pressure for not joining a group of mostly European retailers in signing a safety pact that now has 72 companies involved.

U.S. retailers say they're averse to that global pact because they believe it exposes them to unlimited liability. They also say that the pact sought major funding by private businesses without providing accountability for how the money is spent.

The legally binding global pact, which has been signed by such companies as Swedish retailer H&M and Italian clothing company Benetton, requires companies to pay up to $500,000 per year in the administrative costs of the program. On top of that, they're also responsible for ensuring that "sufficient funds are available to pay for renovations and other safety improvements."

According to the global agreement, funds used to pay for renovations may be generated through negotiated commercial terms, joint investments, direct payment for improvements, government and other donor support or any combination.

The global pact also calls for inspecting clothing factories within the next nine months and will concentrate renovations on those that posted the biggest safety threat. Under that accord, workers will be paid while the factory remains closed.

Unlike the global pact, the alliance of the U.S. retailers is putting more responsibility on the Bangladesh government to make changes.

The group worked with former U.S. Sens. George Mitchell and Olympia Snowe and solicited input from the ambassador of Bangladesh to the U.S., U.S. Bangladesh Advisory Council and the U.S. Department of State, and the Office of the U.S. Trade Representative.