In one of its final moves before the January 20 inauguration, the Trump Administration announced last week that it would block the importation of all cotton from China’s Xinjiang in connection with enduring concerns over forced labor, a move that is expected to significantly disrupt fashion companies’ cotton supply chains. A region in northwest China, Xinjiang is 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.
U.S. Customs and Border Protection (“CBP”) revealed last week that the recent import ban – or more specifically, regional withhold release order – requires that all customs personnel at all U.S. ports of entry detain cotton products grown or produced by entities operating in Xinjiang, including apparel, textiles, and other goods made with cotton. The government’s order builds upon Section 307 of the Tariff Act, which prohibits the importation of merchandise produced, wholly or in part, by convict labor, forced labor and/or indentured labor, including forced or indentured child labor.
Should CBP encounter shipments of goods suspected of being imported in violation of the ban, the burden is on the importers to ensure that the products they are attempting to bring into the U.S. were not made using forced labor at any point in the supply chain, including the production or harvesting of the raw materials. If that cannot be established, the products will be subject to immediate exportation. In order to establish that products are not the result of forced labor, an importer most provide the government with “sufficient information to meet the ‘clear and convincing’ evidence standard,” according to CBP. Examples of documentation that may be “helpful” in establishing that goods are not made using forced labor? “Copies of audit reports, copies of visas and work permits retained by employees or recruiters, and/or copies of other official documentation, including government issues passports.”
While “there is an allowance only if the importer can show the Commissioner of U.S. Customs and Border Protection ‘by clear and convincing evidence’ that the goods were not made by forced labor,” former General Attorney at the Customs and Border Protection Lesleyanne Koch Kessler has previously noted, that is “a tall order that places the burden of proof on the importer.”
The recent import ban – which serves to create a rebuttable presumption that all cotton products coming from the Xinjiang region are made using forced labor (not unlike how goods mined, produced, or manufactured by North Korean nationals are assumed to have been produced by forced labor and are thus prohibited from importation under Section 307, unless proven otherwise) – comes on the heels of the publication of a report from Washington, DC-based think-tank Center for Global Policy, which stated that the likelihood that “a major share of cotton from Xinjiang [is] ‘tainted with forced labor’” is high.
But even before the release of the Center for Global Policy’s report, the U.S. government had been mulling potential new import restrictions on goods coming from Xinjiang, introducing two pieces of legislation – Uyghur Forced Labor Prevention Act and the Uyghur Forced Labor Disclosure Act – both of which were aimed at addressing the human rights abuses being carried out in the Xinjiang region. While both bills passed the House of Representatives in 2020, neither made it beyond the Senate floor. Although, new legislation on this front is expected to be drafted and introduced to the House this year.
Meanwhile, various U.S. government agencies, including the Department of State and Department of Homeland Security issued a Xinjiang Supply Chain Business Advisory in July that focused on the risks of dealings with companies located in the Xinjiang region.
Ultimately, the ban could have sweeping consequences for the fashion industry given its breadth, as well as the extent to which apparel manufacturers rely on cotton from the Xinjiang region. It is worth noting that the ban applies not only to products shipped directly from China, but also to shipments that come from other countries but that nonetheless, contain products made from cotton and/or labor tied to Xinjiang, thereby, expanding the scope of the order, while potentially making detection – and the chance of fraud via improper importation documentation – greater.
As for the impact of the ban, it cannot be understated. The U.S. imported about $9 billion worth of cotton goods from China last year, according to Brenda Smith, the executive assistant commissioner at Customs and Border Protection’s Office of Trade, as reported by the AP. In terms of the Xinjiang region, alone, the Worker Rights Consortium, a labor rights monitoring organization, estimates that it is responsible for 20 percent of the global cotton supply.
Still yet, 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.
Given the sheer scope of the Xinjiang cotton industry and thus, the risk that Western companies’ products are linked to cotton and/or labor from the region, CBP says that the newly-announced order should serve as a “red flag” for companies, and “a strong recommendation that the business community remove the risk from their supply chains,” which is, of course, easier said than done given the size and complexity of modern supply chains, and the oft-reported lack of reliance audit information, which makes it difficult for even well-meaning brands to say with completely certainty where – and who – made their products.
“To assess and potentially mitigate risk of enforcement, textile and apparel companies should proactively review and, if necessary, reconfigure their supply chains to avoid sourcing from the Xinjiang Uyghur Autonomous Region,” Beveridge & Diamond PC’s Deepti Gage, Kirstin Gruver, Stacey Halliday and Megan Morgan assert. “Development and implementation of strict supplier oversight policies that identify risks of forced labor in the supply chain through audits and other screening mechanisms will help to avoid compliance, disclosure, and reputational risks that may arise from taking action too late.”