Witnesses say supply chains are tainted with forced labor in China

WASHINGTON — Human rights activists, labor leaders and others urged the Biden administration on Friday to put its weight behind an upcoming ban on products made with forced labor in China’s Xinjiang region, saying slavery and coercion contaminate corporate supply chains that run through the region and China more broadly.

President Biden signed the law, the Forced Labor Prevention of Uyghurs Act, into law in December, and it is set to go into effect in June. It bans all goods made in Xinjiang or with ties to certain sanctioned entities or programs that transport minority workers to worksites, unless the importer can demonstrate to the US government that its supply chains are free of forced labor.

It remains to be seen how strict enforcement of the law will be, and if it ends up affecting a handful of companies or much more. A broad interpretation of the law could lead to scrutiny of many products the United States imports from China, which has more than a quarter of the world’s manufacturing industries. This could lead to more hold-ups of goods at the US border, which could lead to product delivery delays and increased inflation.

The law requires that a task force of Biden administration officials prepare several lists of entities and products of interest in the coming months. It is unclear how many organizations the government will name, but trade experts said that many companies that rely on Chinese factories may realize that at least part or raw material in their supply chains can be traced back to Xinjiang.

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

The State Department estimates that the Chinese government has detained more than 1 million people in Xinjiang in the past five years — Uyghurs, Kazakhs, Hui and other groups — under the guise of fighting terrorism.

China denounces the allegations as the “lie of the century”. But human rights groups, ex-detainees, participating companies, and the Chinese government itself provide ample documentation showing that some minorities are forced or compelled to work in fields, factories, and mines, in an effort to subjugate the population and bring economic growth to the Chinese. The government sees the key to stability.

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

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

Gulzira Olkhan, an ethnic Kazakh who fled from Xinjiang to Texas, said at the hearing that she was imprisoned for 11 months in Xinjiang along with Kazakhs and Uyghurs who were subjected to torture and forced sterilization. She also spent two and a half months working in a textile factory making children’s school uniforms and gloves, which her supervisors said were bound for the United States, Europe and Kazakhstan, she said through an interpreter.

It is already illegal to import goods made from forced labor. But for products touching Xinjiang, the law would shift the burden of proof onto companies, requiring them to provide proof that their supply chains are free of forced labor before they are allowed to bring goods into the country.

Supply chains for solar, textile and tomato products have already come under a lot of scrutiny, and companies have been working in those sectors for months to eliminate any exposure to forced labour. By some estimates, Xinjiang is the source of a fifth of the world’s cotton and 45 percent of polysilicon, a basic material for solar panels.

But Xinjiang is also a major provider of other products and raw materials, including coal, petroleum, gold and electronics, and other companies may face reckoning as the law takes effect.

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

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

Xinjiang accounts for about 9 percent of global production of aluminium, which is used to produce electronics, automobiles, aircraft and packaging in other parts of China.

“China is the industrial center of the world,” Emily de la Bruyere, co-founder of Horizon Advisory, said at the session.

“Forced labor in Xinjiang and elsewhere in China not only constitutes a serious violation of human rights, but also pollutes international supply chains,” she said. “And this is true across sectors ranging from solar energy to textiles and clothing to aluminum.”

The law has been the subject of fierce pressure from companies and others as well, including critics who fear a broad interpretation of the law could jeopardize the US’s ability to combat climate change, or increase the scramble in supply chains and stoke inflation.

Congress has already allocated significant money to law enforcement. It has allocated $27.5 million this year to implement the law, funding that is probably enough to allocate more than 100 full-time employees to enforce the ban on Xinjiang products alone, according to Mr. Foote.

Companies and trade groups said they were willing to follow the restrictions but wanted to avoid unnecessary harm to their businesses.

Vanessa Ciara, vice president of the American Clean Energy Association, which represents solar and wind companies, urged the government to issue detailed guidance to importers on how to audit their supply chains, and to use only carefully verified information to make its decisions.

“Detaining merchandise for weeks or months at a time is a serious commercial issue,” she told the hearing.

Many companies are doing due diligence on their relationships with Xinjiang, and some major industry associations say they have eliminated forced labor from their supply chains.

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

For example, some companies have segmented their supply chains, to ensure that materials from Xinjiang go to produce goods for China or other parts of the world, and not the United States – a practice that Richard Mujica, a commercial attorney at Miller & Chevalier said should be chartered enough. Under the text of the law, but “will be subject to further review in the coming months and years.”

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

“I don’t think we’ll get the level of clarity that some companies expect,” he said.

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