American retail giants, such as Nike and Apple, are pushing back against proposed legislation aimed at holding “the Chinese Communist Party accountable for the use of forced labor in Xinjiang and ensur[ing] that goods produced through forced labor do not enter the United States.” First introduced in March by Senator Marco Rubio (R-FL) and Representative James McGovern (D-MA), the Uyghur Forced Labor Prevention Act, if enacted, will alter existing law to impose a “‘rebuttable presumption’ that assumes that all goods manufactured in Xinjiang are made with forced labor and therefore, banned under the 1930 Tariff Act” – meaning that they will be barred from importation into the U.S. – unless the commissioner of U.S. Customs and Border Protection certifies otherwise.
As of now, the Tariff Act “prohibits the importation of merchandise mined, produced or manufactured, wholly or in part, in any foreign country by forced or indentured labor – including forced child labor” with the threshold being that there is “sufficient evidence of forced labor,” Reuters first reported this spring. As such, the new bill would set a new – and much more rigid – burden of proof for products manufactured in Xinjiang, a region in northwest China known for playing home to largely-under-wraps detention camps where ethnic Uighurs and other Muslim minorities are reportedly forced to “learn Chinese and memorize propaganda songs” and to work as part of a sweeping “re-education” campaign.
Since its introduction, the Uyghur Forced Labor Prevention Act “has gained bipartisan support, passing the House in September by a margin of 406 to 3,” and referred to the Committee on Foreign Relations, the New York Times revealed on Sunday, with Congressional aides saying that “it has the backing to pass the Senate, and could be signed into law by either the Trump administration or the incoming Biden administration.”
With strong support behind the bill on both sides of the aisle, multi-national companies with supply chains that reach into Xinjiang are looking to hedge their bets, enlisting lobbyists that the Times says “have fought to water down some of the provisions [in the bill], arguing that while they strongly condemn forced labor and current atrocities in Xinjiang, the Act’s ambitious requirements could wreak havoc on supply chains that are deeply embedded in China.” This is the case a wide array of companies, particularly in the retail space given the robustness of Xinjiang’s cotton sector, which accounted for a whopping 85 percent of all Chinese-grown cotton in 2019, with China producing about 22 percent of global cotton supplies, according to a report from the Center for Strategic and International Studies.
“Global fashion brands source so extensively from Xinjiang that a coalition [of more than 170 human rights and trade groups] estimates that it is ‘virtually certain’ that as many as one in five cotton products sold across the world are tainted with forced labor and human rights violations occurring there,” the Guardian reported this summer. “Virtually the entire [global] apparel industry” – high fashion and luxury names, included – “is tainted by forced Uighur and Turkic Muslim labor,” in large part due to the difficulty that comes with tracing the origins of garments and their composite parts in multi-national brands’ sweeping supply chains.
The Times reports that “Apple disputed the claim that it had tried to weaken the legislation, saying it supported efforts to strengthen American regulations and believes the Uyghur Forced Labor Prevention Act should become law.” Meanwhile, in connection with the $920,000 that it spent “on in-house lobbying of Congress and other federal agencies” in the first three quarters of 2020, and the $400,000 that the Times says it paid to outside firms “to lobby on issues including the Act,” a representative for Nike said that the Beaverton, Oregon-based sportswear giant had these firms “on retainer long before the Xinjiang legislation was introduced, and that the company actively worked with lobbying firms to engage Congress on a variety of subjects it cares about.”
In light of such proposed legislation to address the existence of Chinese mass detention camps, there is a growing amount of “pressure on brands and retailers to pivot quickly to identify and contract with other cotton supply sources in order to avoid [the potential for] major disruptions to their supply chains,” according to Cozen O’Connor attorneys Danielle Garno, Samuel Mogensen, and Heather Marx. Such pressure stems not only from mounting efforts by Congress to enact legislation, though, and comes as a result of increased consumer awareness about the state of manufacturing in Xinjiang and and Western brands’ ties to it. An array of brands – from adidas, H&M, and Gap Inc. to the likes of Lacoste – have found themselves at the center of public relations scandals due to their alleged sales of goods connected to forced labor camps in Xinjiang, thereby, drawing ire from human rights organizations and consumers, alike.
Garno, Mogensen, and Marx assert that regardless of the ultimate outcome of the budding efforts by U.S. legislators, which not only includes the Uyghur Forced Labor Prevention Act, but the Uyghur Forced Labor Disclosure Act of 2020, as well, which will require to file annual or quarterly reports with the Securities Exchange Commission regarding Xinjiang-specific manufacturing, and which was also passed by the House of Representatives in September, the industry at large has been put “on notice that cotton and other products from this region are, in fact, controversial.”
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