Lawmakers Look for Tough Implementation of Forced Labor Law Targeting China

Date: Thursday, April 20, 2023
Source: Wall Street Journal

U.S. lawmakers on Tuesday scrutinized possible “loopholes” in an anti-forced labor law blocking many imports from China’s Xinjiang region, expressing bipartisan support for cracking down on companies with supply chains stemming from the region.

Several lawmakers drew attention to potential gaps that might be allowing goods from a largely proscribed region of China to enter the U.S. as part of a hearing of the Congressional-Executive Commission on China. The hearing followed U.S. Customs and Border Protection reporting it has stopped nearly $1.1 billion in goods with possible links to Xinjiang, home to China’s Uyghur people and other minority groups, under the Uyghur Forced Labor Prevention Act.

The report was an anticipated milestone in the enforcement of a law that has been in force for about 10 months.

“As much as we’ve accomplished, it’s only the tip of the iceberg,” said Sen. Jeff Merkley, (D., Ore.), co-chair of the commission. “Compliance with this law requires a paradigm shift…Companies that resist compliance or look to exploit loopholes need to be held accountable.”

The CECC, a group made up of members of both houses of Congress and senior administration officials, was set up in 2000 to monitor China’s compliance with international human rights standards.

“The United States must be persistent in its efforts,” said Rep. Zachary Nunn (R., Iowa), adding that Western companies allowing forced labor in their supply chain are “complicit” in “China’s blatant human rights abuses.”

The UFLPA passed with bipartisan support in 2021 amid concerns about alleged human rights abuses in Xinjiang, a major source of cotton, tomatoes and solar panel components. Researchers say Uyghur and other peoples in the region have been detained and forced to work by authorities. China has criticized the law and denies allegations it is involved in human rights violations.

Under the UFLPA, goods from Xinjiang are presumed to be made with forced labor and are blocked from entering the U.S., though companies may argue their goods should be released from detention.

Customs data show many flagged shipments are ultimately allowed in.

According to data Customs released Monday, the agency has denied entry to 490 of 3,588 shipments stopped for inspection since the law went into effect, while 1,778 are still under review, and the rest have been released into the U.S.

Of flagged electronics shipments, 710 shipments worth $454 million were allowed through over the same period, while 22 worth $9 million were blocked. Reviews are pending on about 1,000 more shipments.

A spokesman said Customs “cannot provide information or make an attribution as to the reason why a number of electronics goods are released after inspection.”

Customs’ overall figures show “gaps,” Anasuya Syam, director of human rights and trade policy at the Human Trafficking Legal Center, told lawmakers. Sen. Merkley said he was “disturbed” at how few shipments have been blocked.

The U.S. Department of Homeland Security, which enforces the UFLPA, didn’t send a representative to the hearing. Homeland Security Secretary Alejandro Mayorkas testified last month at a Senate committee hearing that China is committing genocide against the Uyghur people, echoing the broader U.S. government position. He said enforcing UFLPA is a priority for his department.

CECC members highlighted ways forced labor-tainted goods can enter the U.S., despite calls for increased compliance from businesses. One is by moving Xinjiang-linked goods through a third country to cloud their origin, a practice the Biden administration has said it would address.

Separately, many companies have pushed for “applicability reviews” to argue UFLPA doesn’t apply to particular shipments, even if Customs has flagged them.

Businesses that succeed in an applicability review can have shipments released without the same level of transparency as if they had challenged detention other ways. Several committee members focused on applicability reviews as something requiring scrutiny.

Lawmakers also highlighted an exemption for direct-to-consumer shipments valued under $800, which receive little scrutiny because U.S. law considers them trivial. Fast-fashion brand Shein in particular has been accused by lawmakers and others of using the exception to ship small parcels to the U.S. to avoid the scrutiny larger shipments would receive.

A Shein representative said the company takes visibility across its supply chain seriously and provides products “lawfully and with full respect for the communities we serve.”

Rep. Christopher Smith (R., N.J.), urged a closer look at the exception to see if the U.S. is being “duped.”

Rep. James McGovern (D., Mass.) said there is bipartisan support for tough enforcement of UFLPA, which he sponsored with other lawmakers. “This is not a check-the-box initiative,” he said. “All of us up here—Democrats and Republicans—are interested in making sure it is enforced.”

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