Wal-Mart, Gap skirt the issueJames Brudney in The Los Angeles Times, May 17, 2013
By James Brudney and Catherine Fisk
If the horrific garment factory collapse last month in Bangladesh has any silver lining, it is the response from more than 30 of the world's leading apparel companies — including Benetton, PVH, Abercrombie & Fitch, H&M, Inditex (Zara), Marks & Spencer and Tesco — to sign an agreement to protect the safety and lives of that nation's workers, who make the companies' products.
The Accord on Fire and Building Safety in Bangladesh is a historic advance over the voluntary private factory monitoring that has tragically failed to prevent the recent disasters in Bangladesh and in places around the world where clothes are stitched for the global market. The signatory firms have made a legally binding five-year commitment to establish a monitoring regime in which workers and their unions will participate, and to pay enough money into the system to fix the problems it uncovers.
Given the importance of this accord, it is disturbing that two major American firms have been unwilling to sign the agreement. Wal-Mart announced Wednesday that it would be launching its own (much weaker) initiative, while Gap — the world's third-largest apparel company — has refused to join, citing concerns about liability related to the agreement's provision for legal enforcement through arbitration. Gap has instead proposed that, in most cases, the sole remedy for noncompliance with an arbitration order should be expulsion from the program. But this would in effect amount to a firm being relieved of its obligations.
The only "liability" that derives from the accord is the enforceable obligation to abide by its terms. The global brands and retailers that have signed recognize the agreement must be legally enforceable so that all stakeholders will be accountable and will share the responsibilities associated with protecting workers' lives through factory inspections, worker and management training, public reporting and remediation of hazards. These brands and retailers are all sophisticated and successful industry players. It is difficult to imagine that they would have agreed to sign if the arbitration provision raised unwarranted liability concerns.
Apparel firms such as Gap and Wal-Mart willingly sign legally enforceable agreements all the time — many of which provide for binding arbitration — in the course of their business dealings around the world, including with the factories that make their garments. What is different here is the purpose of the agreement: The accord would help protect workers' rights and workers' lives rather than simply facilitate the buying and selling of apparel for corporate profit. It would be unfortunate if that difference is what is keeping Gap, Wal-Mart and others from signing this crucial initiative.
Underlying the American firms' objections, it appears, is the fear of both financial and moral responsibility. The financial commitments that firms are asked to make here are not trivial. If they were, an agreement probably would have been instituted years ago rather than after more than 2,000 workers had died. But the costs are reasonable and quantifiable, and the many major brands and retailers that have signed on — some with more factories in Bangladesh than Gap or Wal-Mart — obviously consider these costs reasonable.
As for the moral argument, it seems hard to question. If a firm profits by choosing to produce its garments in a country where wages are kept low by cost-cutting that imperils the lives of workers, the firm bears some responsibility for bringing those conditions into line with the most basic of human rights standards. The more than 30 companies, almost all European, that signed the accord have recognized this. The time has come for American industry leaders Gap and Wal-Mart to do the same.
James Brudney and Catherine Fisk are law professors at Fordham Law School and UC Irvine Law School, respectively. Jennifer Gordon and Cynthia Estlund, law professors at Fordham Law School and NYU Law School, respectively, contributed to this column.