US Lawmakers Eye Shein’s Newest Threat

Shein isn’t the only Chinese e-tailer attracting attention on Capitol Hill.

In a letter expressing their concerns about the Uyghur Forced Labor Prevention Act’s (UFLPA) administration, Representative Christopher H. Smith (R-N.J.) and Senator Jeff Merkley (D-Ore.), the respective chair and co-chair of the bipartisan and bicameral Congressional-Executive Commission on China, together with Senator Marco Rubio (R-Fla.) and Representative James P. McGovern (D-Mass.), name-checked Temu, “whose Super Bowl ads signaled its efforts to expand its reach in the United States and whose app is now the one of the most downloaded in the United States.”

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Echoing concerns that their colleagues posed about Shein in February, the lawmakers said that direct-to-consumer purchases that skirt de minimis thresholds could be undermining Customs and Border Protection’s (CBP) ability to enforce the UFLPA. Since the Google Play Store recently suspended the app of Temu’s Chinese parent company Pinduoduo, citing security concerns about malware, a “concerted response” to Temu-based imports is “all the more urgent,” the lawmakers said.

“We request more information about how CBP enforces UFLPA with regard to ‘de minimis’ shipments from the PRC and to report to us about how CPB intends to update the UFLPA implementation strategy to address the challenges posed by direct-to-consumer businesses such as Temu,” noted the letter, which was addressed to Department of Homeland Security (DHS) undersecretary Robert P. Silvers and published Tuesday.

Temu did not immediately respond to a request for comment.

The legislators had other concerns. While they hailed the debut of the UFLPA statistics dashboard, they questioned if Congress had “sufficient information and transparency to accurately assess whether implementation of the law comports with congressional intent.” More is needed, they said, to “help Congress, nongovernmental organizations and the public understand the tools, processes and decisions that the agency uses to enforce the law, toward our shared goal of robust implementation of UFLPA.”

They asked DHS to provide greater transparency about the shipment review process and increased clarity on why goods that have been detained because of possible links to Xinjiang or Uyghur labor transfer programs are being cleared without congressional or public reporting.

Smith, Merkley et. al. also requested that the Forced Labor Enforcement Task Force (FLETF) update its Entity List according to data compiled by “numerous” reputable civil groups.

Smith, Merkley, Rubio and McGovern said that their intention is to “empower the FLETF and CBP to be at the forefront of this critical fight against modern slavery.” The Congressional-Executive Commission on China, they said, will hold a hearing later this month with a panel of trade and labor exerts to examine the UFLPA’s implementation.

“We stand ready to work with you in identifying obstacles and addressing challenges in fulfilling the congressional intent in implementing this law, and we appreciate the candor and transparency you have demonstrated to date in briefing Congress,” the lawmakers said.

A DHS spokesperson said that its “swift and unprecedented” action to enforce the UFLPA has resulted in successful implementation ahead of ambitious statutory deadlines.

Their inquiries come as a new data-focused alliance wants to make it easier for fashion brands to mitigate forced labor risks in their supply chains.

TrusTrace, a product traceability and compliance platform, revealed Wednesday that its customers will now be able to leverage up-to-date insights from data analytics firm Kharon, allowing them to better flag potential supplier risks. This will not only facilitate risk monitoring and evidence collection, the companies said, but it will also promote compliance with the oncoming wave of due-diligence regulation.

The timing of the collaboration couldn’t be better, Shameek Ghosh, co-founder and CEO of TrusTrace, told Sourcing Journal. Already, companies are scrambling to stay on the good side of the UFLPA in the United States and the Supply Due Diligence Act in Germany. Looming over the horizon is the European Commission’s Corporate Sustainability Due Diligence Directive, which will come with its own set of demands for anyone doing business in the 27-member bloc. Over the past year, Ghosh’s team has helped at least nine apparel purveyors launch traceability programs, though he cautioned that it could take two to three years before the “full value” of such initiatives materializes.

“Things like supplier onboarding [and] material tracking don’t [happen] overnight,” Ghosh said. “You have to put a lot of effort into them.”

Adding Kharon’s “enriched” data will help ease things, however.

“W​​e’re intelligence professionals,” said Kit Conklin, vice president at Kharon. “We came from the U.S. government; we focus on utilizing the intelligence methodologies that we use within government to detect various types of risks within supply chains and financial flows. So for us, what we specialize in is bringing to bear that expertise and finding and uncovering hidden risks.”

Having that “intelligence around the risk itself,” combined with that traceability platform that TrusTrace brings is “quite powerful,” he added.

Even so, TrusTrace, which works with boldface names such as Adidas, Decathlon and Filippa K, doesn’t play favorites. It sees itself in the role of an aggregator, one that provides a “single source of truth,” Ghosh said. To wit, Kharon is another node in an ecosystem that includes the Higg Index, the Open Supply Hub, Haelixa and others. The issue of traceability is so vast, he said, that it requires “various different actors and specialists” to tackle it together.

“So we already have the base infrastructural data and on top of that there will be layers of different specialists coming in,” Ghosh said.

Forced labor isn’t a problem that’s going to go away, either, Conklin noted. And because laws like the UFLPA can fit into the purview of different departments, larger brands are trying to “effectively reorganize” themselves to be able to proactively comply with these new requirements.

“There is, I think, a general appreciation across brands, in Europe, in the United States and in Japan, that new regulations are coming online every few months at this point,” he said. “And as a result, there’s a shift strategically to make sure that general counsel has visibility, sustainability has visibility, compliance has visibility, and then obviously, finance has visibility.”

With no “silver bullet” for UFLPA compliance right now, it “takes partnerships [and] teams to be able to help brands comply with this strategically,” Conklin said.

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