Supply chains tainted by forced labor in China, Panel Told

WASHINGTON — Human rights activists, labor leaders and others on Friday called on the Biden administration to campaign for an upcoming ban on products made using forced labor in China’s Xinjiang region, saying slavery and coercion disrupt the supply chains of companies that produce run through the region and China more broadly.

The law, the Uyghur Forced Labor Prevention Act, was signed into law by President Biden in December and is scheduled to go into effect in June. It bans all goods manufactured in Xinjiang or associated with affiliations with specific companies or programs under sanctions and relocates workers from minority groups on construction sites unless the importer can prove to the US government that its supply chains are free from forced labour.

It remains to be seen how strictly the law will be applied and whether it will end up affecting just a handful of companies or far more. A broad reading of the law could scrutinize many products the United States imports from China, which is home to more than a quarter of global production. This could lead to further detentions of goods at the US border, most likely causing delays in product delivery and further inflation.

The law requires a task force of Biden administration officials to compile multiple lists of companies and products of concern over the coming months. It’s unclear how many organizations the government will name, but trade experts said many companies that rely on Chinese factories may realize at least some part or raw material in their supply chains could be traced back to Xinjiang.

“I believe there are hundreds, maybe thousands, of companies that fit the categories of the law,” said John M. Foote, partner in international trade practice at Kelley Drye & Warren, in an interview.

The State Department estimates that the Chinese government has arrested more than a million people in Xinjiang — Uyghur, Kazakh, Hui and other groups — under the guise of counter-terrorism in the past five years.

China denounces these claims as “the lie of the century.” But human rights groups, ex-prisoners, affiliated companies and the Chinese government itself provide ample evidence showing that some minorities are forced or coerced to work in fields, factories and mines in order to oppress the populace and achieve economic growth that the Chinese sees outperforming government as the key to stability.

Rushan Abbas, the founder and executive director of the nonprofit Campaign for Uyghurs, who has written about her sister’s detention in Xinjiang, said at a virtual hearing convened by the task force on Friday that forced labor has become a “profitable endeavor.” of the Chinese Communist Party and was intended to reduce the overall population in Xinjiang’s villages and towns.

“The prevalence of the problem cannot be underestimated,” she said, adding that forced labor was made possible by “the complicity of industry.”

Gulzira Auelkhan, an ethnic Kazakh who fled Xinjiang for Texas, said at the hearing that she was detained in Xinjiang for 11 months along with ethnic Kazakhs and Uyghurs who were tortured and forcibly sterilized. She also worked for two and a half months at a textile factory making school uniforms for children and gloves that her bosses said were destined for the United States, Europe and Kazakhstan, she said through a translator.

It is already illegal to import goods made using slave labour. But for products touching Xinjiang, the law will shift the burden of proof to companies, requiring them to prove their supply chains are free of forced labor before they are allowed to bring the goods into the country.

Supply chains for solar products, textiles and tomatoes have already come under intense scrutiny, and companies in these sectors have been working to eliminate all forms of forced labor for months. By some estimates, Xinjiang produces a fifth of the world’s cotton and 45 percent of its polysilicon, a key material for solar panels.

But Xinjiang is also a major supplier of other products and commodities, including coal, oil, gold and electronics, and other companies may face the law’s enactment.

At Friday’s hearing, researchers and human rights activists presented allegations of links to forced labor programs for Chinese manufacturers of gloves, aluminum, car batteries, hot sauce and other goods.

Horizon Advisory, a Washington-based consulting firm, claimed in a recent report based on open-source documents that China’s aluminum sector has numerous “indicators of forced labor,” such as links to labor transfer programs and the Xinjiang Production and Construction Corps, which have been is a target of US government sanctions for its role in abuses in Xinjiang.

Xinjiang accounts for about 9 percent of the world’s aluminum production, which is used in other parts of China to make electronics, automobiles, airplanes and packaging.

“China is an industrial hub for the world,” Emily de La Bruyère, a co-founder of Horizon Advisory, said at the hearing.

“Forced labor in Xinjiang and elsewhere in China not only constitutes a serious violation of human rights, but also affects international supply chains,” she said. “And that applies to all sectors, from solar energy to textiles and clothing to aluminum.”

The law has been the subject of heavy lobbying from companies and others, including critics, who feared that a broad interpretation of the law could jeopardize the US’ ability to combat climate change or further disrupt supply chains and fuel inflation.

Congress has already allocated significant resources to enforce the law. It has allocated $27.5 million this year to implement the law, funding likely enough to employ more than 100 full-time employees to enforce the ban on Xinjiang products alone, Mr Foote said.

Businesses and trade groups said they were ready to follow the restrictions but wanted to avoid causing unnecessary harm to their businesses.

Vanessa Sciarra, vice president of the American Clean Power Association, which represents solar and wind companies, called on the government to issue detailed guidance to importers on how to audit their supply chains and use only carefully screened information in their decisions.

“The holding of cargo for weeks or months at a time is a serious commercial matter,” she said at the hearing.

Many companies have carefully scrutinized their ties to Xinjiang, and some major industry associations say they have eliminated forced labor from their supply chains.

But some activists have expressed skepticism, saying lack of access to the region has made it difficult for companies to conduct independent audits. It’s also not yet clear what kind of scrutiny the government will require or what kind of business relationships will be permitted by law.

For example, some companies have forked their supply chains to ensure Xinjiang material is used to manufacture goods destined for China or other parts of the world, rather than the United States — a practice Richard Mojica, commercial attorney at Miller & Chevalier, Chartered , said should be sufficient under the wording of the law, but would be “reviewed further in the coming months and years”.

Mr Mojica said in an interview that many companies expected the government to provide clear and practical guidance on how to comply with the law in the coming months, but “this expectation could be misguided”.

“I don’t think we’re going to get the level of clarity that some companies are expecting,” he said.

Leave a Reply

Your email address will not be published.