Nike Canada and Dynasty Gold are currently under heavy scrutiny by Canada’s corporate ethics watchdog after separate investigations were launched into both firms on the 11th of July. The investigations took place after allegations that these firms benefited from forced labor. The watchdog’s probe stems from complaints against the overseas operations of 13 Canadian companies filed by a coalition of human rights groups. According to a statement by the Canadian Ombudsperson for Responsible Enterprise, complaints against the other 11 companies were still being processed and reports are expected to come soon. Notably, these are the first such investigations launched by the agency since it launched its complaint mechanism in Canada.

Nike maintains that they are no longer associated with the firms accused of forced labor in China and has already provided the watchdog with information on its due diligence practices. The company stated, in a letter to the ombudsman, “Nike does not source products from the XUAR and we have confirmed with our contract suppliers that they are not using textiles or spun yarn from the region.” Dynasty Gold, the gold mining firm which holds a major interest in a mine in China, dismissed the allegations against them and said they arose after the firm left the region. The Chinese Embassy in Ottawa reiterated a statement on July 11th stating that the rights of workers of all ethnic groups in Xinjiang were duly protected.

In a report launched in 2022, the United Nations accused China of committing crimes against humanity in its Xinjiang region which is home to 10 million Uyghur Muslims. According to the report, the Chinese authorities have not only imprisoned thousands of people from the Uyghur ethnic minority but also coerced countless of them into state or factory jobs with compromised working conditions.

Across the Canadian border, the United States has tightened its screws on firms allegedly linked with forced labor. After a recent media report surfaced about the Hong-Kong based Techtronic Industry’s involvement in such practices, a bipartisan group of U.S. lawmakers asked the Milwaukee Tool unit to turn over information related to any internal investigations on its products’ links to prison labor. Sen. Jeff Merkley (D., Ore.), and Rep. Chris Smith (R., N.J.) said in a letter sent to Milwaukee Tool Group President Steve Richman that the firm might be sourcing work gloves from political prisoners working against their will. However, a spokeswoman from the Milwaukee Tool said, ” The firm regularly conducts a complete and thorough review of our global operations and supply chain. We have found no evidence to support the claims being made.”

Forced labor goods from developing countries are rapidly percolating in Western markets and China is not the only country where forced labor is sourced from. Child labor has increased in the supply chains of developed countries bloc such European Union, Canada and the U.S. with their big corporations paying the producers from poverty-stricken Asian countries like Pakistan, Bangladesh and India, a fraction of the real cost of the products. Asia is an important exporter of products to Europe and the US. The European Union wants to ban forced labor products imported from third countries as well as those made within the EU. The bloc’s executive cited statistics from the United Nations’ International Labor Organization that an estimated 27.6 million people work in forced labor. European Commissioner for Trade Valdis Dombrovskis said, “We aim to eliminate all products made with forced labor from the EU market, irrespective of where they have been made.”

A report from the UN rights office launched in 2022 said that 14% of those in forced labor were doing jobs imposed by state authorities, voicing concern about the abuse of compulsory prison labor in many countries, including the United States. The Covid-19 pandemic has only worsened the conditions of forced labor in developing countries with swelled debt levels for many workers, as well as armed conflicts and climate change, leaving people in extreme poverty and compelling more to migrate.