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Global apparel associations collaborate to renegotiate supply terms

  

Thirteen associations representing garment suppliers in China, Bangladesh, Myanmar, Cambodia, Vietnam, Pakistan, Turkey, Morocco and Indonesia have collaborated to renegotiate their contract terms with global clothing retailers, reports Reuters. These suppliers are demanding a maximum 90-day payment term and an end to discounts after orders are placed. The draft document, due to be finalized and released in late April, is a joint initiative of the Star Network, funded by Germany's international development agency GIZ, and the International Apparel Federation.

The suppliers hope their united front will prevent retailers from playing them off against each other in search of more lenient terms after suffering from widespread cancellations and payment delays at the start of the coronavirus pandemic. Though the document will not be legally enforceable, the aim is to foster purchasing practices which "do not cross the boundary of misuse of buying power to the obvious and avoidable detriment of the manufacturer," according to the release.

A later phase of the initiative would also aim to build ways of enforcing the terms, including an international arbitration mechanism for manufacturers to raise grievances with buyers. The draft document says retailers must pay suppliers within 90 days, with deferred payments attracting an additional fee to cover interest and loss of profit, while discounts could not be requested after a purchase order is issued.

The draft also includes limitations on the use of the 'force majeure' clause which exempts retailers from costs and liability for events outside their control.

 
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