Ethical Performance
inside intelligence for responsible business


Daewoo International admits using cotton from forced labour

September 2014

Daewoo International Corp., a major South Korean trading company has become a target of human-rights activists for using cotton that it admits is produced by child labour and forced adult labour in Uzbekistan. While the company says it has asked the country’s government to stop the practice, it says it has no plans to stop using the cotton. Daewoo runs some of the largest cotton-processing plants in Uzbekistan.

Activist network Cotton Campaign is demanding that Daewoo withdraw its investments from the Central Asian country. The network says that would exert more influence on the Uzbek government to stop coerced adult and child labour at state-controlled cotton harvests.

A Daewoo spokesman said the company didn’t use forced or child labour at its Uzbekistan-based operations, though the company is aware of the use of forced labour and child labour during harvests and confirmed that it acquired cotton picked by such workers.

The U.S. Labour Department lists Uzbekistan among users of the “Worst Forms of Child Labour,” as defined in U.S. and international regulations, saying children as young as 10 were sent to harvest cotton in 2012 with irregular access to sufficient food, clean water or sanitation facilities.

The Uzbek government plans to mechanize 80% to 85% of its harvests, without specifying a schedule.

Daewoo runs two Uzbekistan-based cotton-processing operations, which produced US$151 million in goods last year. The company plans to double that figure by 2020. The company also runs a joint venture with South Korea’s minting authority, manufacturing cotton pulp in Uzbekistan used for specialized paper such as bank notes, gift certificates, and passport pages.
Daewoo subsidiary Daewoo Textile Fergana LLC exports yarn and fabric to Russia, China, Iran, and Turkey.

A spokesperson for government-owned Korea Minting & Security Printing Corp. said it was aware of the concerns and plans to purchase 1,000 mechanical cotton pickers for the joint venture’s source of cotton in Uzbekistan. The company has used Uzbek cotton pulp to print South Korean and Peruvian currencies.

Cotton was a major source of revenue for Uzbekistan when it was under Moscow’s rule from 1876 to 1991, but its importance in the country’s economy has waned since its independence, with production falling 35% in the same period, according to the U.S. State Department. About 8% of Uzbekistan’s export revenue comes from cotton, most of which is sold to countries such as Russia, China and Bangladesh.

Global | Human rights

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