Companies brace for chaos as Xinjiang import ban begins in US

HONG KONG — Manufacturers and retailers are bracing for chaos as U.S. Customs prepares to enforce a ban on imports from China’s Xinjiang region from Tuesday in response to reports of forced labor.

The companies are scrambling to assess how the new rules could affect their businesses and supply chains with Asian apparel suppliers, international retail chains, U.S. solar panel makers and Chinese building materials makers. tile among dozens of groups that could see US-bound shipments seized.

The ban intensifies pressure on Beijing following allegations of widespread human rights abuses – including torture, arbitrary detention and forced labor – against Muslim Uyghurs and other minorities in the far western region of Xinjiang. . China denies the allegations and has warned against retaliatory action.

Signed into law by President Joe Biden late last year, the Uyghur Forced Labor Prevention Law assumes that all imports to the United States linked to Xinjiang, from cotton and tomatoes to materials for tiling and solar panels, were made using forced labor and brands. them as “high priority” for input.

More than 900 shipments from the region were seized in the last quarter of 2021 by US authorities under previous trade restrictions.

But business and trade groups said the vague language of the new legislation threatened to jeopardize the bulk of China’s $500 billion in annual shipments to the United States.

“The way the law is written could be interpreted to apply to other types of goods from other parts of China that would have involved forced labor at some point in the supply chain,” said Doug Barry, senior director of the US-China Business Council, said Nikkei Asia in an email.

There are reports of inmates being moved out of Xinjiang to work in other parts of the country, while components produced in the region have been traced to exports to the United States shipped from elsewhere in China.

Barry warned the law could further strain pandemic-hit supply chains and fuel US inflation, which is already at 40-year highs.

Businesses are still waiting for clear instructions from U.S. Customs and Border Protection, Barry said.

“They released little information in advance, and companies won’t know many details about what they have to comply with until the date they have to comply,” he said. “We expect the implementation to be messy.”

US company Mission Solar has pledged to follow the new rules, but the equipment supplier said it was “difficult to know what effect this will have at this stage”.

Hong Kong apparel supply chain manager Lever Style, whose customers include Fila, Hugo Boss and Theory, said it was turning to fabrics made with Indian cotton for US customers ahead of the prohibition.

“We still source most of our cotton fabrics from mainland China, but we can quickly switch to sourcing fabrics elsewhere,” said Stanley Szeto, the company’s executive chairman.

Xinjiang has a booming industrial, mining and agricultural sector. Everything from peppers and nuts to electrical equipment and polysilicon, a key material for making solar panels, is shipped to the United States from the region. It also represents 20% of world cotton and 80% of Chinese national production.

Last week, US Customs released an operations guide for companies seeking to prove their products were not made using forced labor, including supply chain maps and vouchers. control.

A new list released on Friday excludes goods produced by or containing parts made by more than 20 companies, including Baoding LYSZD Trade and Business, Changji Esquel Textile and Hotan Haolin Hair Accessories.

US Customs has said it will strictly enforce the rules, which threaten to worsen already strained relations between Washington and Beijing.

China’s state-owned Global Times reported last week that US shoe company Skechers had organized an independent investigation into its supply chain after US customs seized Chinese-made goods. Companies such as Nike and H&M have previously faced questions about the Xinjiang cotton used in their products.

“If the law is implemented, it will seriously disrupt normal cooperation between China and the United States, as well as global industrial and production chains,” the Chinese Foreign Ministry spokesperson said last week. , Zhao Lijian. “If the United States insists on doing so, China will take strong measures to defend its own rights and interests as well as its dignity.”

There are also concerns that US agencies lack the resources to properly control imports and enforce the new law. But authorities say they will use a multi-layered approach leveraging information from large systems.

“We are not stopping shipments just on hearsay or a single piece of information,” JoAnne Colonnello, director of the Customs and Border Protection Center, said during a press briefing last week. “We are looking at the situation in total, and all the evidence involved, to make sure we have effective and efficient targeting.”

Britain’s Sheffield Hallam University released a report last week documenting the use of forced labor in Xinjiang to make polyvinyl chloride, an essential component of floor tiles. Academics and media outlets have published reports detailing the systematic use of forced labor among Uyghurs held in what critics describe as internment camps.

China, which initially denied the existence of such facilities, later said they were vocational training centers designed to combat rising religious and separatist extremism in the region.

A sweeping crackdown in Xinjiang in recent years has cracked down on cultural and religious practices and sparked allegations of forced sterilization and arbitrary imprisonment – conditions some Western governments call genocide.

Rights groups have been calling for years for companies and brands tied to shirts, pants and other products made in Xinjiang to be held accountable for working conditions in the region.

“If governments require companies and businesses to do meaningful due diligence – which is not easy to do in China – before engaging in their business, I think that is something that we would be happy,” said China researcher Alkan Akad. to Amnesty International.

But some big companies, including Apple and Coca-Cola, have lobbied against the Biden administration’s import ban, saying they found no evidence of forced labor in manufacturing or supply chains. from Xinjiang.

Japanese retailers Muji and Uniqlo say they expect little impact on their operations.

“We do not export any products made in the Xinjiang Uyghur Autonomous Region to the United States,” Muji spokesman Ryohin Keikaku said, referring to the region’s official name. “In our business activities, we comply with the laws and regulations of each country and region, and strive to respect human rights and manage labor standards.”

Additional reporting by Rurika Imahasi, Peggy Se and Jack Stone Truitt

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