Xinjiang forced labor

The U.S. government recently announced additional political sanctions on China concerning human rights violations in Xinjiang. The Chinese government’s treatment of Uyghurs and other ethnic minorities in Xinjiang has attracted the attention of human rights organizations and democratic governments over the last few years. Accusations include arbitrary detention in concentration camps, forced labor, and propagandist “re-education,” and the list goes on. The Council on Foreign Relations estimates that between 800,000 to two million Uyghurs and other Muslim minorities have been detained since 2017. If you’re looking for a simple introduction to the issue, look no further: American teenagers are using TikTok, the Chinese social media platform, to film themselves discussing Xinjiang human rights violations, disguising the videos as knitting and make-up tutorials (here and here).

Not only is the Chinese government complicit in these crimes, but many Chinese businesses that supply international brands are exploiting the free labor of Muslims in detention centers, developing consumer goods that often make their way to U.S. retailers. The response to this horrifying violation of human rights has come one small step at a time, but if the claims of forced labor and torture are accurate, the issue has yet to attract the international attention it warrants. Last year, Congress announced the Uyghur Human Rights Policy Act, which requires greater U.S. scrutiny of the injustices in Xinjiang. The Act was signed by President Trump last month. The sanctions against China’s political leaders and major corporations are growing—earlier this year the U.S. Treasury Department imposed sanctions on a number of Chinese officials involved in the human rights abuses in Xinjiang. These sanctions include restrictions on their visas and freezing all their American assets. On July 31, the Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned a Chinese government entity, the Xinjiang Production and Construction Corps (XPCC), and two more government officials. Treasury Secretary Steven T. Mnuchin affirmed “the United States is committed to using the full breadth of its financial powers to hold human rights abusers accountable in Xinjiang and across the world.”

On July 20, the U.S. Department of Commerce (DOC) announced sanctions on 11 Chinese companies, adding them to the Entity List, a tool utilized by DOC’s Bureau of Industry and Security to “restrict the export, reexport, and transfer (in-country) of items subject to the Export Administration Regulations (EAR) to persons (individuals, organizations, companies) reasonably believed to be involved, or to pose significant risk of becoming involved, in activities contrary to the national security or foreign policy interests of the United States.” The last time DOC made additions to the Entity List was May 22, adding several Chinese companies as well as the PRC’s Ministry of Public Security’s Institute of Forensic Science.

How have China’s government and businesses responded to the sanctions? For one, the government’s primary response has been a combination of denial and retaliation. Officially, the Communist Party refers to the camps as “vocational education and training centers,” or “re-education camps.” Beijing claims its efforts in Xinjiang are necessary to ensure national security by eradicating religious extremism and separatism. For those following the news of Beijing’s increasingly tight hold on Hong Kong, the above claim will have a familiar ring to it (see Fred Rocafort’s Requiem for Hong Kong). Wang Wenbin, spokesperson for China’s Ministry of Foreign Affairs, said the recent U.S. action “violates the basic norms of international relations” and “interferes in China’s internal affairs.” To make things worse, the Chinese government has cooked up a fresh batch of retaliatory sanctions on a number of U.S. politicians, including Sens. Marco Rubio and Ted Cruz.

Of the 11 Chinese companies added to the DOC Entity List most recently, only one has published an official response. The day after the sanctions were announced, Chanji Esquel Textile Co. (CJE) published a response on their website, saying they are “deeply offended by the decision” to place their company on the Entity List. “We absolutely have not, do not, and will never use forced labor anywhere in our company.” The response cites an audit from last year that confirmed that CJE does not use forced labor. “We are working with all relevant authorities to resolve the situation, and we remain committed to Xinjiang as we are proud of our contribution in the region over the last 25 years.”

Any American company of any size that buys products from Chinese factories should increase their awareness of forced labor in Xinjiang. U.S. federal law prohibits importing any merchandise or product, wholly or in part, produced by forced or indentured labor. Such merchandise is subject to seizure and will potentially lead to criminal investigation of the importer. Abuses are especially rampant in the fabric/garment industry. According to the Uyghur Human Rights Project, Xinjiang region produces up to 84 percent of China’s cotton output and is the primary supplier of cotton/textile/apparel products. That means any Chinese factory, not just the ones in Xinjiang, could be using materials produced by forced labor. Costco was involved in a controversy last year when investigations discovered that Hetian Taida, a Chinese company that produces pajamas and blankets sold at Costco, manufactured their product using Uyghur forced labor.

The question to ask now is, how do I ensure my factories in China aren’t complicit in human rights violations in Xinjiang? Should you take them at their word? Should you attempt to trace their factory receipts? At the moment, any potential supply chain links to Xinjiang pose a serious danger and willful ignorance regarding the situation is not likely to hold up in a court of law. Too many companies just assume their situation is unique and their factory owners would never do this . . . “I went to his daughter’s wedding!” We even have one company who told us that they “went to the factories in Xinjiang and nobody was being forced to work!”

As U.S. sanctions on China continue to increase, the urgency for American businesses to cut Xinjiang from their supply chain will correspondingly increase as well. Last month, the U.S. Departments of State, Treasury, Commerce, and Homeland Security issued the Xinjiang Supply Chain Business Advisory, to inform “businesses with potential supply chain exposure to Xinjiang” and help them “consider the reputational, economic, and legal risks of involvement with entities that engage in human rights abuses in Xinjiang”.

Bottom Line: If you want your company to avoid getting hit with a forced labor claim by the U.S. government or see your company’s name in the media linked to concentration camps, now is the time to do whatever you can to prevent this sort of thing from happening to you.