Petition to the OECD Seeks to End Daweoo's Use of Cotton Harvested with Forced & Child Labor in Uzbekistan

Petition requests mediation by the National Contact Points of the Organisation for Economic Cooperation and Development from South Korea and Norway

December 3, 2015: A petition aimed at ending Daewoo’s publicly admitted use of forced child labor in Uzbekistan’s cotton harvest (2/2013, 6/11/13, 6/25/13, 8/13/14) was submitted by the Cotton Campaign, the Korean Trans National Corporations Watch (KTNC), and Anti-Slavery International to the Organization for Economic Cooperation and Development (OECD)’s South Korean and Norwegian National Contact Points (NCPs). The petitioners request that the NCPs mediate the dispute with Daewoo International in the wake of the determination by OECD NCP of France that trade of cotton produced with forced child labor violates the OECD Guidelines for Multinational Enterprises.

With their appeal, the petitioners ask the OECD NCP to assess the breaches of the Guidelines and appropriate resolution. They also appeal to Daewoo’s parent company POSCO, to ensure its subsidiary fulfills its responsibilities under the Guidelines, and the institutional investor holding shares of Daewoo, Norges Bank Investment Management, to pressure the company to act.

What: OECD NCP petition concerning Daewoo Corporation for profiting from forced labor of children and adults. Read the petition here.

Where: OECD NCP offices of South Korea and Norway

When: December 3, 2014

Who: Daewoo International Corporation is the largest processor of cotton in Uzbekistan. POSCO is one of the world’s largest steel companies and parent company of Daewoo. National Pension Service of Korea (NPS) and Norges Bank Investment Management (NBIM) is an institutional investor in Daewoo International. KTNC Watch is a network of legal policy and advocacy organizations that monitor and advocate for Korean corporations to be accountable for their human rights and environmental impacts worldwide. Anti-Slavery International is the world's oldest international human rights organization and works at local, national and international levels to eliminate all forms of slavery around the world. The Cotton Campaign is a global coalition of human rights, labor, investor and business organizations dedicated to ending forced labor in the cotton sector of Uzbekistan.

Background: Cotton is a state-controlled business in Uzbekistan, the world’s fifth largest cotton exporter, and the Uzbek government remains one of very few around the world that subjects its citizens to forced labor through the implementation of state policy. Each year, the government forcibly mobilizes farmers to grow cotton and more than a million men, women and children to harvest it. The Uzbek government takes in at least $1 billion in cotton profits annually, but all of it goes into an extra-budgetary fund to which only the highest government officials have access. The government once again used the forced labor system of cotton production in 2014, as documented in this report at the conclusion of the harvest.

Daewoo buys 5% of all of Uzbekistan’s cotton, was the first multinational company to invest in Uzbekistan in the 1990s, and has expanded from one to three factories, including Global KOMSCO Daewoo, which produces cotton pulp used to manufacture South Korea’s currency. In return, the Uzbek government provides Daewoo discounted cotton prices, tax incentives and preferential loans. The KTNC Watch and the Cotton Campaign have engaged Daewoo directly since 2012. The company has steadfastly refused to cease purchasing forced-labor cotton and to conduct independent human rights monitoring of its supply chain in Uzbekistan, yet repeatedly admitted to purchasing cotton produced with forced and child labor (February 2013, June 11, 2013, June 25, 2013, and August 13, 2014).

As a company owned by a member of the United Nations Global Compact, POSCO, and headquartered in a member state of the Organization for Economic Cooperation and Development (OECD), South Korea, Daewoo is responsible for avoiding contributing to human rights violations in its operations and supply chain. As an institutional investor of Daewoo International, NPS and NBIM should, consistent with their stated policy commitments to corporate social responsibility, use its leverage to press Daewoo International to ensure its subsidiary’s operations in Uzbekistan comply with standards for multinational enterprises.

By committing to the OECD Guidelines for Multinational Enterprises, the governments of South Korea, Norway and the other OECD member states have a duty to protect human rights by working proactively to ensure that multinational enterprises headquartered in their countries:

• Respect the internationally recognized human rights of those affected by their activities”

• Take adequate steps to ensure that forced or compulsory labor does not exist in their operations.”

• Avoid “causing or contributing” to human rights violations, and “address violations when they occur;

• Prevent or mitigate human rights violations directly linked to their operations, products, or services by a business relationship even when the company has not “contributed to” or caused the human rights violation; and

• Carry out risk-based due diligence to identify, prevent, and mitigate actual and potential” human rights violations.

With their petition, KTNC Watch, Anti-Slavery International and the Cotton Campaign seek the good offices of the OECD NCPs of South Korea and Norway, to facilitate mediation and issue a “final determination” that addresses the actions taken by Daewoo on the issue of forced labor in Uzbekistan, including recommendations of steps Daewoo can take immediately and in the long-term to fulfill its responsibilities under the Guidelines.

Most Uzbek cotton is sold to companies in China and Bangladesh, and globalized production results in apparel with Uzbek cotton on retail shelves worldwide. More than 150 global brands and retailers have publicly committed to boycott Uzbek cotton until the abuses end. Leading retailers, including Nike, H&M, Ikea, C&A, Jones Group and Michael Kors pushed Daewoo International out of their supply chains in protest of the South Korean company’s support for the forced-labor system as the largest cotton manufacturer in Uzbekistan. As a result of a petition filed by International Labor Rights Forum and the Cotton Campaign, the United States Departments of Justice is currently investigating Daewoo for alleged violations of U.S. law prohibiting a company from importing into the United States any product made with forced labor.