Federal Focus on Forced Labor in Xinjiang: Supply Chain Risks
There have been longstanding tensions in the Xinjiang province of China between the Chinese government and the Uyghurs, a predominately Muslim ethnic group. The UN estimates that there are more than 1 million Uyghurs in detention camps, and there are reports of pervasive surveillance, wide-spread forced-labor, and “re-education” programs.
These human rights abuses present significant risks for companies whose supply chains include products from Xinjiang. Xinjiang produces the majority of China’s cotton, and cotton from Xinjiang may be mixed with cotton from other regions (or not be labeled as being from Xinjiang). Because of this, some companies, such as Target Australia, have reported that they will no longer source cotton from China. Several other products that may be integrated into global supply chains are produced in Xinjiang, including tomato paste and sugar.
Recent actions at the U.S. federal level reflect serious concerns about the treatment of Uyghurs in Xinjiang, and concerns about the effects of forced labor, in Xinjiang and elsewhere, on global supply chains.
On October 1, 2019, U.S. Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) for garments produced in Xinjiang by Hetian Taida Apparel Co., which were produced with prison or forced labor. The CBP issued four other WROs for products mined or produced with forced labor in Malaysia, Democratic Republic of the Congo, Zimbabwe, and Brazil. The CBP Press Release announcing these WROs may be read here.
On October 17, 2019, the Congressional Executive Commission on China (CECC) held a hearing titled “Forced Labor, Mass Interment, and Social Control in Xinjiang.” Members of the CECC recognized the human rights abuses occurring in Xinjiang and expressed concerns that U.S. imports are tainted by forced labor. Representative Thomas Suozzi (D-New York) specifically identified several companies whose products include materials from the region which may be produced by forced labor: Adidas; Campbell Soup; Kraft Heinz; Coca-Cola; Gap, Inc.; H&M; Espirit; Calvin Klein; Tommy Hilfiger; Nike; and Patagonia. Members of the CECC also expressed their support for the Uyghur Human Rights Policy Act of 2019 (H.R. 649), which would direct U.S. government bodies to report on China’s treatment of the Uyghurs.
On October 31, 2019, the Co-Chairs of the CECC, Representatives James McGovern (D-Massachusetts) and Marco Rubio (R-Florida), wrote to the Acting Commissioner of the U.S. Customs and Border Protection (CBP), asking CBP “to use its authority under 19 U.S.C. § 1307 to investigate and block imports made with forced labor in the [Xinjiang Uyghur Autonomous Region] from entering the U.S. market and, where appropriate, pursue criminal investigations related to the use of forced labor to produce goods being imported into the United States.” A copy of that letter may be read here.
On November 4, 2019, Senators Sherrod Brown (D-Ohio), Ron Wyden (D-Oregon), and Richard Blumenthal (D-Connecticut) wrote to Attorney General, Secretary of State, Secretary of the Department of Labor, and the Acting Secretary of the Department of Homeland Security to request information about U.S. government actions “to ensure the federal procurement process is not complicit in human trafficking or forced labor.” A copy of that letter may be read here. While the Senators did not specifically name concerns about products from the Xinjiang region in this letter, it further demonstrates that concerns about forced labor in supply chains are receiving consistent attention at the federal level.
U.S. trade law prohibits the importation of goods made, in whole or in part, with forced labor. Businesses in affected industries should closely scrutinize their supply chains and compliance programs to avoid any supply chain disruptions and establish programs to identify and mitigate forced labor that may exist. Squire Patton Boggs can assist clients in reviewing their supply chains, and navigating the enforcement of current and potential future WROs.