New ban on products made with forced labor in Xinjiang, China
Congress considering additional restrictions due to forced labor and human rights concerns
The Trump administration announced last week that it would ban all inbound shipments containing cotton or any cotton products – including textiles and apparel – originating from the Xinjiang Production and Construction Corps (XPCC) due to forced labor and human rights concerns.
The XPCC is a paramilitary organization that is responsible for most of the cotton production and harvest in the Xinjiang Uighur Autonomous Region (“XUAR”) of China. The U.S. Department of Agriculture estimates that XUAR’s cotton harvest accounts for more than 80 percent of China’s overall cotton production.
This action is the latest in the administration’s effort to combat forced labor and other human rights violations in the Xinjiang region, home to China’s Muslim Uyghur community.
In September of 2020, the U.S. Customs and Border Protection (CBP) announced it would detain imports suspected of being made with forced labor from the following entities in XUAR:
- Xinjiang Junggar Cotton and Linen Co. and its subsidiaries – Cotton
- Hefei Bitland Information Technology Co. – Computer parts
- Yili Zhuowan Garment Manufacturing Co. – Apparel products
- Baoding LYSZD Trade and Business Co. – Apparel products
- Lop County No. 4 Vocational Skills Education and Training Center – All products
- Lop County Hair Product Industrial Park – Hair products
In July of 2020, the administration listed the XPCC as a specially designated national (SDN) under U.S. sanctions laws enforced by the Office of Foreign Asset Controls (OFAC) by the Treasury Department; this bars all transactions that benefit the XPCC or its subsidiaries and affiliates with a 50-percent-or-greater controlling share by XPCC. The Commerce Department has also placed companies connected to the Xinjiang region on its Entity List subject to technology export controls.
In addition, the Senate may consider the House-passed Uighur Forced Labor Prevention Act (H.R.6210/S.3471) before the end of the year. As currently drafted, the bill includes the following provisions:
- A requirement for the administration to develop an action plan to address forced labor in the XUAR.
- A prohibition starting 120 days after enactment of the importation of all goods produced, in whole or in part, in the XUAR, based on a presumptive link to forced labor – unless the importer can provide clear evidence to the contrary.
- A requirement that SEC-reporting companies include new disclosures about any nexus to the XUAR.
It is possible that the bill’s provisions could be amended before a final vote in the Senate. We will keep you posted on any developments.
To learn more about this important issue and the impact on outdoor companies, check out this OIA webinar from September.