Canada's corporate ethics watchdog is looking into whether the local affiliate of US sportswear giant Nike and Dynasty Gold, a Canadian mining firm, benefited from using ethnic Uighur forced labor in China.
This might not sound like a big deal because the Canadian Ombudsperson for Responsible Enterprise only has investigative powers and can recommend prosecution. Dynasty Gold called the allegations “totally unfounded,” and Nike argued that the complaint has "factual inaccuracies."
Still, the probe might have two geopolitical ramifications.
First, it happens amid a rather icy phase in Canada-China ties. Beijing will not be happy with Ottawa about the investigation — although the Chinese are used to playing defense over their treatment of Uighurs, which most Western governments say are often "employed" as modern-day slaves by the ruling Communist Party.
Second, the proceedings will be closely watched in the US, where in late 2020 Nike was among a handful of big companies that lobbied against Congress passing the Uighur Forced Labor Prevention Act. The bill, signed into law in December 2021 by President Joe Biden, bans the import of goods when there is "reasonable evidence" they were produced with Uighur forced labor in China's northwestern Xinjiang region.
So far, US customs authorities have only seized some Chinese imports under the new law. But if the Canadian complaint eventually yields sufficient proof, the Biden administration might face bipartisan pressure to do more to enforce the law right when Biden wants to lower the temperature with Beijing.