Gap to sign safety deal in Bangladesh

CHICAGO - Reuters

Protesters hold signs during a demonstration outside of Gap’s headquarters on April 25 in San Francisco, California, in this file photo. AFP photo

Gap’s chairman and CEO said on May 21 that the U.S. retailer was ready to sign a global accord designed to prevent another deadly disaster in Bangladesh’s garment industry, provided there were some “very minor accommodations.”

A series of incidents at factories has focused attention on safety standards in Bangladesh’s booming garment industry while creating a trans-Altantic divide between U.S. and European retailers over ways to resolve these issues.

Some U.S. retailers, including the owner of the Gap, Banana Republic and Old Navy chains, had said they would not join the European pact without changes to the way conflicts are resolved in the courts.


IndustriALL, a union organization based in Europe which helped create the pact, had said the agreement could not be amended to address concerns of U.S. companies.

Speaking at the company’s annual general meeting on Tuesday, Gap CEO Glenn Murphy said the company was still in discussions over the agreement proposed by European labor groups. Under this pact, retailers would be subject to a binding arbitration that would be enforceable in the courts of the country where a company is domiciled.

Murphy did not mention specific changes sought by Gap. “We’ve not given up that a global accord of some kind can be worked out,” he said, but added that the proposal at present did not “make sense” for the company.

Binding arbitrations typically restrict the ability of parties to appeal any decision in court, which makes U.S. retailers nervous about possible consequences of arbitration.

Many European retailers, including the world’s two biggest fashion retailers - Inditex SA and Hennes & Mauritz - had signed on, along with almost 30 other companies retailers.