Date: Friday, September 18, 2020
Source: Supply Chain Dive
Customs and Border Protection withhold and release orders that block the import of goods from entities found to use or promote the use of Uighur labor in China's Xinjiang Province could redirect sourcing of roughly $200 million in Chinese imports, a CBP spokesperson confirmed to Supply Chain Dive Thursday.
CBP issued five WROs between June 17 and Sept. 8, covering one hair-products factory, two apparel manufacturers, a cotton and linen manufacturer, a maker of computer parts, and an entity that sells Uighur labor in the Xinjiang region. Shipments suspected of coming from these companies will be held by CBP and either destroyed or re-exported after an investigation.
The number of WROs issued in fiscal year 2020 is unprecedented, according to CBP's statement, with the majority affecting Chinese imports. But Acting CBP Commissioner Mark Morgan said firms should take precautions beyond the orders. "There are reputational economic and legal risks to doing business with entities in Xinjiang that engage in forced labor and other human rights violations, and respectable businesses should disentangle their supply chains from Xinjiang," Morgan said on a media conference call Monday.
Acting Deputy Secretary of Homeland Security Ken Cuccinelli said the recent WROs are part of broader approach to crack down on forced labor and unfair trade practices by China, including intellectual property theft and knowingly exporting counterfeit medical supplies to the U.S.
The Australian Policy Institute published a report in February alleging 83 automotive, technology and apparel firms source from factories using Uighur and other ethnic minority labor.
CBP, the Department of Homeland Security and the State Department issued a joint business advisory in July, warning DHS would take "increased enforcement action" on this issue. The difficulty in enforcing these actions is determining which products, especially textiles which may be transformed before reaching the U.S., should be held. Morgan said CBP uses government information and reports from non-governmental organizations to make these determinations, but the work is slow-going.
"These investigations can take a long time, especially with companies operating in countries like China [where] we don't have the full access that we wish we had," Morgan said.
The difficulty in tracing supply chains back to their origin is part of the reason it took one year after the first Xinjiang-related WRO was released to issue the subsequent five. Cuccinelli said the government is working on incorporating more technology into enforcement activities, to allow for better visibility and traceability of imports landing on U.S. shores — putting other trading partners on notice that they too should avoid Xinjiang.
"They should know that the day will come in the not too distant future, we hope, where we'll be able to identify products even indirectly that aren't being shipped from Xinjiang but are used by others to make their own products," he said.
Companies with a high level of visibility into the tiers of their supply chains will have an easier time determining whether they are exposed to Xinjiang and finding new sources — if they have not already done so. Sourcing organizations with a low level of visibility below top tiers will need to increase that visibility through supplier communication and work with third-party auditors to avoid seizure of their goods.
The list of concerned organizations could grow larger soon, in the form of a regional WRO, Cuccinelli confirmed. In August, the AFL-CIO and others groups filed a petition with CBP, calling for the organization to issue a WRO for Uighur labor across the entire Xinjiang region, not restricted to specific entities.
"We are giving that more legal analysis," Cuccinelli said. "We have not used a WRO like that in China before, and so we want to make sure that once we proceed, that it will stick, so to speak."
The broader WRO would be category-specific covering cotton, textiles and tomato products linked to Uighur labor within the region.
Cuccinelli said the existing WROs would stand until the Chinese government frees captive people and ends state-sponsored forced.