By Kenneth Rapoza, CPA Industry Analyst
The Government Accountability Office says more can be done to stop forced labor goods from coming into US ports. Here’s a look at some American apparel makers who have sourced from companies that are currently banned by Customs.
No one is saying they did it on purpose. But global brands, including many American household names, have contracted with Chinese companies that have been banned from importing to the US because of forced labor. Most of them are in the Xinjiang region of far western China, a province that has become a pockmark on China globally due to the detention and open-air prison of millions of Uyghur minorities Beijing views suspiciously.
The Government Accountability Office (GAO) published this month a 67-page overview of ways the Customs and Border Protection (CBP) and other agencies can work better to stop the import of forced labor. The report was mainly recommendations for inter-agency cooperation.
Forced labor complaints are often made by a coalition of human and labor rights groups. They present their case to the US Department of Homeland Security, and after a review, Customs and Border Protection (CBP) can issue what are known as Withhold Release Orders (WRO). These orders essentially “capture” imports from companies in the complaint until the company can provide reasonable information that they are not using forced labor.
In the report, the GAO recommended that CBP make a description of its WRO revocation and modification process publicly available. CBP agreed with GAO’s recommendation.
Of the 29 WROs issued by the CBP between March 2016 and January 2021, 16 were Chinese companies. Of the 25 WROs that are still active, 15 are Chinese.
One Chinese companies on the list is Huizhou Mink Industrial Co. A WRO was issued for them in August 2018. Most WROs are company-specific. When they are not, they are targeted towards a specific product, like the first WRO issued in 2021 against all Xinjiang companies producing cotton and tomato derivatives. Huizhou makes inflatable stand-up paddle boards, inflatable boats, floats like the kind you might see hooked up to the back of a motor boat on a lake, and inflatable pools.
Another company, Hefei Bitland, makes Asus and Lenovo laptops. The US accounts for around 21% of their exports — the most out of any country — based on research from Panjiva, the supply chain intel unit of S&P Global Market Intelligence. https://es.panjiva.com/Hefei-Bitland-Information-Technology-Co-Ltd/36455712. They also make integrated circuit boards for sale in the US under different brands.
One clothing manufacturer, Yili, was banned in September. Its page on Alibaba and other e-commerce websites has been removed.
Hero Vast Group has made clothing and apparel for some of the biggest brands in the US. Now companies like QVC have to make sure that nothing they’re selling was made in a Hero Vast factory.
Globally, millions of adults and children are subjected to forced labor, compelled to perform work or service under various forms of threat or coercion. Section 307 of the Tariff Act of 1930 prohibits the importation into the United States of goods produced in any foreign country wholly or in part by forced labor. CBP has sole responsibility for enforcing this law.
Forced labor is both a pressing global humanitarian concern and a persistent economic problem that harms the competitiveness of US businesses. Where China is concerned, it is a double-whammy: we are forced to compete against both Chinese oversupply and forced labor.
Before leaving government, Secretary of State Mike Pompeo said that China was committing acts of genocide against the Uyghur Muslims of Xinjiang.
The Biden administration has publicly agreed with that assessment, including a public statement from Secretary of State Tony Blinken.
Some countries have followed the US in taking action against commerce from Xinjiang if forced labor or prison labor was used. This includes the UK, which is threatening to fine companies if they have been found to have contracted with a supplier in Xinjiang.
Germany has announced they will do this as well this week, only it was spurred on by labor rights violations in Brazil and Pakistan, not in Xinjiang where, perhaps not ironically, Volkswagen has an assembly line.
The UK has not come out yet to say that there is genocide occurring in Xinjiang, though they seem to be moving in that direction.
UK foreign secretary Dominic Raab called for a United Nations investigation and insisted on urgent access to Uyghur camps in Xinjiang to ascertain the level of human rights abuses taking place there. Raab has stated that Uyghur abuses have reached an “industrial scale” and “beyond the pale.”
All of this talk is fine, but if the US is serious, we need a sweeping ban against Xinjiang supply chains until there is a clear picture of what is happening in the area.
“The Uyghur Muslims live under constant surveillance, even those who are not in Chinese re-education camps,” says Michael Stumo, CEO of CPA. “Why are we allowing for companies to source goods from there and sell them to US consumers? Until those human rights abuses stop, more than a few WROs need to be issued as it is clear that many US companies have supply chain links in Xinjiang.”