updated 11/23/2004 3:49:33 PM ET 2004-11-23T20:49:33

Under pressure from the Chinese labor federation, the world’s biggest retailer, Wal-Mart Stores Inc., said Tuesday it would permit branches of the official Communist Party-controlled union in its Chinese stores if employees requested it.

The 123 million-member All China Federation of Trade Unions last month threatened to sue Wal-Mart and other companies based outside China if they don’t set up union branches in their China operations.

"Should associates request formation of a union, Wal-Mart China would respect their wishes and honor its obligation under China's Trade Union Law," said the Bentonville, Ark.-based company in a statement faxed to news media.

"Currently, there are no unions in Wal-Mart China because associates have not requested that one be formed," the statement said.

Wal-Mart sourced $15 billion worth of products in China last year.

The 123 million-member All China Federation of Trade Unions last month threatened to sue Wal-Mart and other companies based outside China if they don't set up union branches in their China operations.

The federation did not immediately respond to telephone or faxed requests for comment.

The unionization drive was the latest attempt by the union _ the sole body permitted to organize workers in China _ to penetrate the most dynamic sector of the economy, shore up its declining membership, and boost its lowly political status.

Branches of the Chinese union are usually toothless management-controlled bodies that work mostly to prevent conflict.

Wal-Mart, which operates 39 stores in China employing 20,000 people, didn't say what specifically prompted its announcement. But it did note recent media coverage about the company's relationship with the union and said the statement was intended to "clarify that relationship."

"Wal-Mart is currently in full compliance with China's Trade Union Law, which states that establishing a union is a voluntary action of the associates," the statement said.

At the same time, a provincial appeals court in Saskatchewan has sided with Canadian workers in their fight to unionize a Wal-Mart store, ordering the retailer to turn over reams of internal documents the union claims show a corporate campaign to derail union drives.

In a 28-page ruling released Tuesday, three appeals court judges ordered the documents turned over to the union and the provincial labor relations board, saying it is impossible to determine relevance if the documents have not been produced.

The Saskatchewan Labor Relations Board had requested the papers at the behest of the union, which is trying to organize a Wal-Mart store in Weyburn, in southern Saskatchewan. The board became involved in the case when the United Food and Commercial Workers Union announced a majority of employees had signed membership cards at the store, making union certification automatic under provincial law, but said it was not been able to obtain documents from the retail giant as part of the union certification process.

A spokesman for Bentonville, Ark.-based Wal-Mart Stores Inc., said the company was surprised that the earlier ruling was overturned and that it was considering an appeal.

Wal-Mart has no unionized stores, although the Canadian workers recently had their union accredited by the local labor board.

The retailer has more than 4,300 outlets in nine countries employing more than 1.3 million people.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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