Canada probes Walmart, Hugo Boss, Diesel, and Nike about forced Uyghur labor

Canada’s government is acting against China’s alleged practice of forced labor among Uyghurs under pressure from human rights groups trying to prove that Canadian companies are turning a blind eye for profit.

The Canadian operations of big box retailer Walmart and clothing manufacturers Hugo Boss and Diesel are the latest among 6 of the 14 firms accepted for investigation so far by the Canadian Ombudsperson for Responsible Enterprise (CORE), a labor abuse watchdog. More are expected to follow. The CORE probe follows submissions by the Uyghur Rights Advocacy Project (URAP) and 27 other human rights organizations that allege the 6 companies contract slave labor in their supply chains in China.

The CORE probe follows lobbying by the Uyghur Rights Advocacy Project (URAP) and 27 other human rights organizations that allege the 14 companies contract slave labor in their supply chains in China.

The companies all deny that Uyghurs are forced to make their products, but CORE said that it would turn to independent fact-finding “to address the conflict between the allegations and the position[s] of the [companies].”

Nike Canada, fashion brand Ralph Lauren Canada, and mining giant Dynasty Gold are among the other companies CORE is scrutinizing.

CORE was established in 2018 to investigate allegations of human rights abuses in Canadian companies’ foreign operations in the garment, mining, and oil and gas sectors.

Not the first time for Hugo Boss? During World War II, Hugo Boss used forced labor and made uniforms for the Nazi Party.

CORE has no power to issue fines or penalties, but an unfavorable CORE report could lead to buyer boycotts and the withdrawal or denial of trade support from the Canadian government in Ottawa.

Despite anti-slavery legislation in place, Canada is a “dumping ground” for imported goods made by Uyghur forced labor, said Mehmet Tohti, CEO of the Ottawa-based URAP, which is funded by the U.S. Congress-backed National Endowment for Democracy.

URAP was launched on May 1, 2020, to press Beijing for justice for the mostly Muslim Turkic minorities who, since 2016, have suffered a government crackdown in their homeland in northwestern China’s Xinjiang Uyghur Autonomous Region. Reports show that Chinese authorities arrested and detained or imprisoned roughly 1 million Uyghurs and other Muslim Turkic minorities there under the region’s then Chinese Communist Party Secretary, Chén Quánguó 陈全国.

Under Chen’s watch as Xinjiang leader from 2016 to 2021, hundreds of thousands of Uyghurs and other Muslim Turkic minorities detained in Xinjiang were assigned, upon release, to factories elsewhere in China to work under conditions of forced labor, often to make goods for Western markets such as Canada.

“We must stop the products of these factories, where my people are working in conditions of slavery, from reaching consumers in Canada,” URAP’s Tohti told The China Project.

Disgrace for Canada

Though in February 2021 Canada named China’s treatment of the Uyghurs a genocide — the second nation to do so after the U.S. — concrete legal action against China in Parliament in Ottawa has not followed until now. Tohti said many Canadian companies still “act with impunity.”

“They ignore Canada’s legislation against forced labor, and the government does nothing about it. This is a national disgrace for Canada.”

Critical of CORE, Tohti accused the watchdog of having “no teeth.”

“It pays lip service to due diligence,” Tohti said, adding that he believed that only one shipment of imported goods suspected of having been made by Uyghur forced labor in China had been seized in the five years since CORE’s founding — and that one shipment was released quickly.

Canada’s record of anti-slavery legislation has been patchy and weak, Tohti said, citing a failed attempt in 2018 to get to a vote on a bill against forced labor in supply chains (C-423), followed, on July 1, 2020, by passage of the Canada-United States-Mexico Agreement (CUSMA).

CUSMA attempted to close trading loopholes along America’s shared borders with Canada and Mexico and to prohibit importing across those borders any goods that were mined, manufactured, or produced wholly or in part by forced labor, from any country. It remains largely unenforced.

In November 2021, frustrated with Ottawa’s failure to intercept goods made with forced labor from being imported into Canada illegally, the opposition Conservative Party introduced into Canada’s Parliament the Xinjiang Manufactured Goods Importation Prohibition Act (Bill S.204).

The act “would make the job easier for border agency officials, who must screen millions of products each year,” Senator Leo Housakos told The Globe and Mail. But the process of passing the bill into law stalled in May 2022.

Sarah Teich, a Canadian attorney and a legal advisor to the URAP told The China Project that their legal team had been told by Canadian government officials that “it’s not really Canada’s way to target a particular country in this way by imposing a total ban on goods.”

Canada actively supports Uyghurs in other ways, Teich said, citing the February 2023 Canadian Parliament vote to take in 10,000 Uyghur refugees. Uyghur refugees who fled to third countries are being assessed and could begin their resettlement to Canada in 2024.

While the ban on all imports from Xinjiang sat on the back burner, a separate bill, four years in the making, passed into law in May 2023 as the Fighting Against Forced Labor and Child Labor in Supply Chains Act. When it comes into force on January 1, 2024, the law will require businesses and government institutions producing, purchasing, or distributing goods in Canada to prove each year their compliance with forced labor legislation.

The Shein problem

The new law will only apply to businesses listed on the Toronto Stock Exchange that have at least $20 million in assets and at least $40 million in revenue, and employ at least 250 people.

“This is not a bad law,” Teich said. “But it is not good enough.” She would like to see the bill trying to ban all imports from Xinjiang resurrected. “S.204 would have been far easier to enforce.”

Snail-paced legislation and its inability to stem the tide of tainted products arriving in Canada disturbs Tohti, who complained that smaller companies will still continue to operate under the radar.

The U.S. law called the Uyghur Forced Labor Prevention Act (UFLPA) of 2021 addressed slave-labor goods imported by sea. However, Tohti said, “it is impossible to intercept the billions of dollars of goods crossing the land border between the U.S. and Canada every day.”

In 2021, a Toronto Star report found that since 2018 nearly 400 shipments from Chinese companies blocked from entering U.S. markets because of forced labor in Xinjiang instead found their way into well-known Canadian retailers. Though they denied wrongdoing, citing audits that cleared the imported goods of ties to forced labor in China, journalists concluded that the Canadian retailers’ audits were subjective and unreliable.

Giant Chinese online fashion retailer Shein, currently valued at $64 billion, has been a significant forced-labor offender, Tohti said. Because of the UFLPA’s import value threshold of $800, below which packages can still be imported, millions of dollars of cheap clothes continue to find their way into both the U.S. and Canada.

“Their goods are cheap because they are made by Uyghur forced labor,” Tohti said, noting that Shein was granted permission to expand its warehouse facilities in Markham, a Toronto suburb. “This decision by the local municipality makes no sense. If Shein’s goods are rejected by the U.S., Canada will accept them with open arms.”

Tackling multinationals was an uphill battle because of their size and legal muscle, Tohti said.

“They have brilliant legal teams that could crush us,” said Tohti, who nonetheless remains determined. “Uyghur forced labor is widespread and systematic. It is also subsidizing the Chinese government. We are complicit.”

Fighting for unity against forced labor in the democratic world often takes Tohti and fellow Canadian lobbyists to the European Parliament.

“Change has to start with us. China plays divide and rule, but we must resist that,” he said.

Sarah Teich said she welcomed CORE’s thorough investigation of Canadian companies’ “barefaced denials in the face of all the evidence.”

The 14 high-profile companies CORE will investigate represent the tip of the iceberg, Teich said, citing 81 more companies the Australian Strategic Policy Institute reported are tainted by Uyghur forced labor and “many more” cited by Adrian Zenz at the Victims of Communism Memorial Foundation, in Washington, D.C. More companies still are cited as offenders by Professor Laura Murphy, an expert in Uyghur forced labor teaching at Sheffield Hallam University in the U.K., on whose work the coalition relied in its submissions.

Babur Ilchi, a Canadian Uyghur and program director at the Washington, D.C.–based Uyghur Human Rights Project, welcomed the CORE investigations.

“These investigations should just be the beginning,” Ilchi said. “Beyond CORE, Canada needs to implement similar legislation to the UFLPA and work closely with the United States to make sure Canadians are not complicit in Uyghur forced labor.”