5 Top Fashion Takeaways From Tuesday’s China Commission Testimony
The Uyghur Forced Labor Prevention Act (UFLPA) came under the klieg lights at a Congressional-Executive Commission on China (CECC) hearing on Tuesday as lawmakers from the bipartisan and bicameral committee questioned if the law required additional congressional oversight and action to enhance its enforcement nearly a year after it took effect.
With the UFLPA’s potential to “alter the dynamic of our ongoing struggle with the People’s Republic of China, but only if it’s implemented faithfully and properly,” the stakes couldn’t be higher, said Representative Christopher H. Smith, a Republican from New Jersey and chair of the commission. Beijing, he said, has been using forced labor to give itself an unfair trade advantage with the aim of imposing its governance model upon the rest of the world. But he said that the “genius” of the UFLPA is that it imposes a rebuttable presumption that all Xinjiang-originating goods are the product of forced labor from persecuted Muslim minorities and therefore barred from entering the United States, meaning that the burden of proof is not on customs officials but on importers to demonstrate otherwise.
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Since June, Customs and Border Protection (CBP) has flagged nearly $1 billion in shipments, which Smith called an “important start” to holding China accountable for abuse allegations such as extrajudicial detention, forced sterilizations, forced abortions and modern slavery, all of which the superpower has vigorously denied. Equally helpful, he said, is the agency’s launch of a dashboard to track enforcement statistics. Even so, Smith expressed unease about the “lack of full transparency” that will enable Congress to evaluate the efficacy of implementation.
“We’re all concerned as to whether the presumption standard is being fully implemented, and whether goods that are initially detained are subsequently being released without congressional or public reporting,” Smith said, referencing a letter that he and Senator Jeff Merkley, the Democrat from Ohio who serves as his co-chair, wrote to Department of Homeland Security (DHS) undersecretary Robert P. Silvers last week. He said that lawmakers have questions about why the Entity List of bad actors that the legislation requires “remains so spartan” and whether technology, such as isotopic and DNA testing, was being employed to “its fullest” to identify goods with a nexus to Xinjiang. The CECC also sought to know if goods produced by forced labor outside the province were being sufficiently captured and if technical loopholes were allowing tainted products to skirt scrutiny.
While neither CBP nor DHS was at the hearing—a question of timing, according to Smith—several expert witnesses provided testimonies and answered questions. Here are five top takeaways.
The UFLPA represents a ‘revolutionary approach’
There’s a reason why the term “landmark” is so frequently used to describe the UFLPA legislation. Rather than presuming the norm, which is that abuses are not being committed, it does the opposite, marking a “new, even revolutionary” approach to protecting human rights that can establish a roadmap on how to address forced labor everywhere, said James P. McGovern, the Massachusetts Democrat who introduced the bill to the House of Representatives in 2021.
Merkley said that the UFLPA has made a difference by putting businesses “on notice” so they can no longer claim that it’s too difficult to trace their supply chains. And the law has delivered measurable results, he said, causing direct imports from Xinjiang to plummet and businesses to speed up capacity building in other parts of the world, “increasing the diversification and sustainability of their supply chains.”
“We believe this new law will be a turning point to stopping China’s genocide,” testified Elfidar Iltebir, president of the Uyghur American Association, describing more than six decades of “repressive assimilationist policies to weaken and eliminate“ the Uyghur identity. “We believe it will be a catalyst for greater awareness among businesses of the CCP’s atrocities in the Uyghur homeland. That it would compel them to investigate and cut links to supply chains connected to Uyghur forced labor in the Uyghur homeland and across China.”
All eyes are on de minimis shipping—and Shein and Temu
Congresswoman Jennifer Wexton, a Democrat from Virginia, said that de minimis shipping rules allow vendors to import goods without having to report basic data such as the country of origin and manufacturer if they’re valued at less than $800. Both the CECC’s letter and a recent U.S.-China Economic and Security Review Commission brief namedropped Chinese e-tailers Shein and Temu, which have become the most downloaded shopping apps in the United States with a respective 6.3 million and 10 million installs last month alone. Since their products ship individually, lawmakers said, they almost always fall below the tariff threshold.
Writing to Silvers, the CECC cited the Google Play Store’s recent suspension of the app of Temu’s Chinese parent company Pinduoduo over security concerns about malware as a red flag, saying that it “only makes a concerted response to Temu-based imports all the more urgent.” Temu’s lack of affiliation with established brands, the brief said, has raised questions about product quality as well as allegations of copyright infringement. Pinduoduo has also been accused by China Labor Watch of “extreme overtime,” with workers made to toil 380 hours per month. Temu and Pinduoduo did not immediately respond to requests for comment.
Wexton, meanwhile, noted that Shein has been accused of “harvesting data” from customers and using it to “manipulate their supply networks to make products at a lower cost than their competitors.” She also pointed to a Bloomberg investigation that used isotopic testing to find traces of Xinjiang cotton in garments ordered from the fashion juggernaut on two separate occasions.
Wexton is the sponsor of the Uyghur Forced Labor Disclosure Act, a bill whose goal is to require publicly traded companies and those asking to trade securities on the U.S. exchanges to report any links to Xinjiang forced labor as a condition of being registered and as a part of their ongoing annual disclosures to investors.
Shein, she said, is poised to execute an IPO in the coming months. In line with the bill, which passed in the House of Representatives last year and the “credible allegations” made against the fast-fashion titan regarding Uyghur forced labor, she plans to pen a letter to the Securities and Exchange Commission requesting that it require Shein to certify that it does not violate the UFLPA as a condition of its registration.
“As a global company with customers and operations around the world, Shein takes visibility across our supply chain seriously,” a Shein spokesperson told Sourcing Journal. “For over a decade, we have been providing customers with on-demand and affordable fashion, beauty, and lifestyle products, lawfully and with full respect for the communities we serve.”
Anasuya Syam, human rights and trade policy director at the Human Trafficking Legal Center, urged a revision of de minimis provisions, including mandating the collection of supply chain data from shippers, to ensure that the threshold isn’t being exploited as a “backchannel entry” for forced-labor goods. Many such products enter the United States via air or land, yet only maritime shipping data is shared with the public. Disclosure of all trade data is “critical to our efforts to trace force labor risks and facilitate enforcement,” she added.
Responding to Smith’s statement that CBP processed 685 million de minimis shipments in fiscal year 2022, Syam said that the “de minimis shipping environment is being used to circumvent the UFLPA.” It cannot be a “carte blanche” for companies to send “whatever goods they want to the U.S. market, especially goods made using forced labor,” she added.
There are other cracks forced-labor goods might slip through, like transshipment
While CBP has seized more than 3,500 shipments since the UFLPA kicked into gear, only 490, or less than 14 percent, were denied entry into the United States, Syam said. Of the blocked cargo, just 91 were apparel and textile products with a combined value of $3 million.
“These low detention numbers and [the] low dollar value are concerning, especially when this sector is prioritized by the U.S. government’s implementation strategy,” Syam said. She said she also worried that CBP might be missing shipments containing inputs from Xinjiang that enter the United States from third countries.
Another gap: the data around re-exportation. “Of the 490 denied entry, we don’t know how many shipments were sent to Canada, Mexico or another country. We need to ensure that these countries aren’t dumping grounds for CBP. The exportation data is critical for civil society as we support international partners in advocating for similar import bans in other countries.”
Syam said that the UFLPA enforcement dashboard shows that thousands of shipments are currently mired in applicability reviews, the burden of proof of which is lower than the “clear and convincing” standard required to rebut the forced labor presumption. “We need more visibility into the applicability review process to ensure that companies are not sidestepping UFLPA enforcement,” she added.
Kit Conklin, a non-resident senior fellow at the Atlantic Council’s GeoTech Center and client engagement vice president for risk analysis firm Kharon, noted that since June, CBP has detained more than $490 million worth of goods from Malaysia and over $369 million worth of goods from Vietnam, versus $89 million from China.
“These figures illustrate UFLPA transshipment risk and why the lack of a de minimis exception necessitates the need for due diligence in all suppliers not just those located in China,” he said.
Conklin said that while CBP has prioritized enforcement relating to four categories of goods—cotton, polysilicon, tomatoes and aluminum—the scope of the UFLPA is “much larger.” Billions of dollars worth of raw materials, rare earth and critical minerals and products, for instance, are exported from Xinjiang each year, including 10 percent of the global production of rayon.
“In addition to all of these raw materials and goods sourced from Xinjiang, the UFLPA also bans products made with forced labor in other provinces in China,” he said. “Sometimes that’s forgotten.”
The Entity List needs work
Beaming in through Zoom, Laura Murphy, professor of human rights and contemporary slavery at the Helena Kennedy Centre for International Justice at Sheffield Hallam University, said that the U.S. government needs to prioritize updating the Entity List, which restricts companies from doing business with those it names.
“Congress should be clear to FLETF that it must presume that all state-sponsored labor transfers in the Uyghur region constitute forced labor and that FLETF should add any company engaged in coerced transfers of labor onto those lists,” Murphy said, using an acronym for the DHS-led interagency Forced Labor Enforcement Task Force. “These lists will assist importers in ensuring that they know which supplier to include from their sourcing.”
Murphy’s research has identified 55,000 companies operating in Xinjiang, 3,300 of which are involved in textiles. Ideally, she said, she would like to see all 55,000 named in the Entity List.
“If we presume that forced labor dominates the region under the UFLPA, we’re presuming that all companies that operate in the region should be having their goods stopped and therefore they should be added to the Entity List,” she said.
Murphy said that FLETF can begin by adding state-owned operations that have been instrumental in the development of the labor transfer program.
“Some of these companies have transferred 5,000 people to their own facilities alone,” she said. “These companies are egregious bad actors. It is my suspicion, based on media reports about what’s coming up, that CBP is in fact stopping goods made by some of these companies, but importers don’t know necessarily who those companies are. And they could know if they were added to the Entity List.”
It’s also possible, Murphy said, for the Entity List to include all the textile companies known to be operating in Xinjiang “because then importers can link them to their parent companies; they can pressure the parent companies to stop sourcing from the Uyghur region.”
“There’s more than enough information in the public sphere now to really vigorously add more companies to the Entity List to be a signal to the legal community and to advocacy groups that the UFLPA Entity List is being taken seriously but also to show the import community that they can begin the process of eliminating force-labor-made goods,” she added.
It can’t just be the U.S. fighting forced labor
Syam reiterated the “very real risk,” in the absence of international cooperation, of companies dumping America’s forced-labor rejects in countries such as neighboring Canada and Mexico. While the United States-Mexico-Canada Agreement requires all signatories to have import bans, only the United States is implementing one with any degree of robustness, she said. To her knowledge, Canada has detained one shipment, which it subsequently released after a successful appeal by the importer. Mexico, which announced its ban in February, will begin implementing it in May.
“So the time is ripe for the three countries to convene the trade ministers to ensure that we are aligned on the ways these import bans are going to be enforced, and specifically make sure that we take a region-wide approach to the issue of forced legal labor,” she said.
A patchwork of import ban laws with different requirements, after all, will only “frustrate enforcement,” Syam said. The European Union has such a ban coming down the line, but it doesn’t target Xinjiang as a region because doing so would breach the World Trade Organization’s rules on non-discrimination.
“We should also work with our G7 and G20 allies to ensure global adoption of input bans that are consistent with each other,” she said. “The United States cannot act alone, there should be no safe harbor for goods made with forced labor anywhere in the world.”
Then there’s the fact that alignment also needs to be more than what’s “technically on paper,” Murphy added. “Significantly more” communication of both strategy and information is important because CBP’s “monumental task” could benefit not only the United States but also allies worldwide, she said.
Still, action by other countries is necessary to avoid “bifurcated supply chains,” ones that allow companies to “sell clean products in the United States and turn around and pocket the proceeds of tainted forced labor products elsewhere,” Murphy added.
“It‘s a big challenge to implement this law with the complexity of international trade, but we owe it to the millions of exploited Uyghurs and other ethnic minorities in China,” she said. “And…this isn’t just about China. This is about taking on this issue and setting a model for how we deal with it around the world.”
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