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Volume XI, Number 267

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Human Rights and Forced Labor Sanctions Announced

Earlier this week, the United States, the European Union, Britain, and Canada imposed sanctions on several Chinese officials for human rights abuses against the Uyghur minority in China’s Xinjiang Uyghur Autonomous Region (XUAR). China promptly retaliated. Although the U.S. has sanctioned Chinese companies and individuals in connection with allegations of forced labor and human rights abuses in the past, most notably through the use of the Department of Commerce’s entity list, this is the first instance in which U.S. allies have leveled sanctions of their own simultaneously in a coordinated rollout. This is consistent with President Biden’s early promise to enlist allies to confront China. In this instance, the Treasury Department sanctioned two Chinese officials, one a former Deputy Party Secretary in Xinjiang and the other the Director of the Xinjiang Public Security Bureau. The EU and Britain sanctioned two additional individuals. Canada’s sanctions were the first imposed on China since the 1989 crackdown on protestors in Tiananmen Square. China immediately retaliated by sanctioning ten European individuals and four institutions.

The Department of Commerce’s Bureau of Industry and Security has been preventing U.S. exports to Chinese companies and individuals associated with forced labor and human rights abuses in Xinjiang since the end of 2019, and the Treasury Department’s Office of Foreign Asset Control began sanctioning individuals in Xinjiang under the Global Magnitsky Human Rights Accountability Act in 2020. We expect the U.S. and allies to continue to sanction forced labor and human rights abuses for the foreseeable future, and we expect those sanctions to cover an ever-broadening group of entities and individuals. Similarly, this week’s incidence of tit-for-tat sanctions will likely be repeated and escalated.

This will impact multinational companies doing business in the U.S., Europe, and China. Because China has denounced allegations of human rights abuses in the XUAR as “lies and disinformation,” it is likely that tensions will continue to mount, placing multinational companies in the difficult position of facing U.S., EU, British, and Canadian sanctions related to Chinese operations and Chinese sanctions related to non-Chinese business activities. We expect the impact on supply chains to increase over time, and disruptions will begin to manifest themselves more frequently.

These U.S. sanctions are also consistent with larger U.S. government efforts to protect the integrity of supply chains. Companies should take steps to ensure that they are conducting proper supply chain due diligence and implementing effective compliance programs. In particular, companies should review due diligence best practices and closely reexamine their supply chains with the knowledge that the U.S. and its allies are focused on human rights and forced labor issues in Xinjiang.

© 2021 Foley & Lardner LLPNational Law Review, Volume XI, Number 83
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About this Author

Michael J. Walsh Government Litigation Lawyer Foley Lardner Law Firm
Partner

Michael J. Walsh, Jr. is a partner and litigation attorney with Foley & Lardner LLP. Based in the firm’s D.C. office, he is a member of the Government Enforcement Defense & Investigations Practice.

Prior to joining Foley, Mike served as Chief of Staff at the U.S. Commerce Department, and he also performed the duties of the General Counsel since August 2019. In this role as Chief Legal Officer, Mike oversaw more than 600 attorneys and was responsible for all legal matters within the Department. He also served as the senior advisor to the Secretary of Commerce on the most...

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David W. Simon, Foley Lardner, Government Matters, FCPA Attorney
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David W. Simon is a litigation attorney who devotes much of his practice to helping corporate clients avoid and manage crises that potentially give rise to government enforcement actions. He provides compliance advice, conducts internal investigations, defends companies against enforcement actions, and represents companies in litigation.

The Foreign Corrupt Practices Act (FCPA) is a principal focus of Mr. Simon’s practice. He also has extensive experience representing clients in antitrust matters and in defending False Claims Act investigations...

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Gregory Husisian, Foley Lardner, International Export regulation lawyer, Automotive industry Attorney
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Gregory Husisian is a partner and litigation attorney with Foley & Lardner LLP. Mr. Husisian is chair of the firm’s Export Controls and National Security Practice, focusing on international regulatory issues posed by Office of Foreign Assets Control (OFAC) economic sanctions, International Traffic in Arms Regulations (ITAR), Export Administration Regulations (EAR), and Nuclear Regulatory Commission export controls, the Foreign Corrupt Practices Act (FCPA), and the antiboycott regulations. He also represents companies with national security concerns in acquisitions...

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Christopher M. Swift, government enforcement litigator, Foley lardner law firm
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Christopher Swift is a litigator with Foley & Lardner LLP and a member of Foley’s Government Enforcement, Compliance & White Collar Defense Practice. Focused on national security and international affairs, he represents clients in internal investigations and government enforcement actions involving anti-money laundering (AML), arms controls (ITAR), economic sanctions (OFAC), dual-use exports (EAR), and the Foreign Corrupt Practices Act (FCPA). Dr. Swift also counsels clients in proceedings before the Committee on Foreign Investment in the United States (CFIUS)...

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Jeffery R. Atkin is a partner and business lawyer with Foley & Lardner LLP. His areas of practice cover a broad range of business and financial matters, including renewable energy, project finance, private placements, mergers and acquisitions, joint ventures, real estate development and equipment procurement and leasing. Mr. Atkin is chair of the Solar Energy Team, co-chair of the Energy Industry Team, and a member of the Latin America Practice.

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