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Canada Launches Forced Labor Investigation on Zara

The Canadian Ombudsperson for Responsible Enterprise is investigating Zara Canada for alleged use of Uyghur forced labor in the company's supply chain, CORE said. The investigation, which CORE began Nov. 6, comes in response to a complaint filed by 28 civil society organizations in June 2022.

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An Initial Assessment report released by CORE says Zara allegedly has "supply relationships" with three Chinese companies "using or benefiting" from Uyghur forced labor: Huafu Top Dyed Melange Yarn Co. Ltd., Shandong Zoucheng Guosheng, and Xinjiang Zhongtai Group.

Haufu Top Dyed Melange Yarn was identified as a supplier of Zara by one of the civil society groups by way of a Chinese media source claiming Zara as one of "Haufu's long term customers," the report said. Haufu was one of 15 factories that received a percentage of Uyghur laborers from April 2017 to June 2018.

A satellite factory of Shandong Zoucheng Guosheng claimed that it brought over 3,500 jobs to Xinjiang. Texworld USA, a U.S.-based "international business platform," found that Shandong's parent company, Jiangsu Guotai Guosheng Co. Ltd., was a supplier to Zara.

The Xinjiang Zhongtai Group has a "high risk" of forced labor, according to the complainants, and Zhongtai's parent company, Aral Fulida, is a "supply chain partner" of Zara, the report said. In November 2021, the complainants sent a letter to Zara asking the company to ensure that it doesn't benefit from Uyghur forced labor. Zara's parent company, Inditex, responded by saying that it didn't have any "commercial relations" with any factory in Xinjiang and any legal complaints made against Inditex in France were “completely unfounded," the report said.

The report said that the complainants said that Zara hasn't addressed its connections with the "Chinese Entities." Zara's use of factories in China "almost inevitably" means that there is Uyghur forced labor in its supply chain and "there is no indication that Zara has taken any concrete steps, such as desk-based due diligence, to ensure 'beyond a reasonable doubt' that they are not using forced labor," the complainants said, according to the report.

The report also mentioned that there are criticisms of one of the civil society group's reports but they are not addressed in the Initial Assessment.

Reached for comment, Zara Canada said its parent company, Inditex, doesn't "have any commercial ties" with any factory in the region and has a zero-tolerance policy towards forced labor.

Zara also declined to participate in mediation because it believes that complaint to be inadmissible, CORE said in a news release.

“While mediation is not possible at this time, our process is flexible and may move from investigation to mediation with the consent of both parties,” said Sheri Meyerhoffer, a lawyer for CORE. “However, regardless of our approach, all parties are expected to act in good faith by actively participating throughout the entire complaint process.”

The CORE has launched other investigations, including against Diesel Canada, Hugo Boss Canada and Walmart Canada (see 2309050041).