DHS blocks cotton imports from major Chinese firm over forced labor
The Department of Homeland Security on Wednesday said it would block imports of cotton products from a major Chinese state-owned firm in the Xinjiang Uighur Autonomous Region, saying the company uses forced labor of ethnic Uighur Muslims there.
The move is the latest from the Trump administration to punish Beijing for human rights abuses in the northwestern region of China, where the ruling Communist Party has interned over a million people in work and "reeducation" camps. It's a pressure campaign the incoming Biden administration is expected to continue.
Details: The mandate, called a withhold release order, targets the Xinjiang Production and Construction Corps., a massive conglomerate and quasi-military administration that runs farms, factories and internment camps across the region.
The WRO empowers Customs and Border Protection to destroy or reject imports it determines are made with cotton from the firm, known as XPCC, which the agency says employs 12 percent of the Xinjiang population and produces 17 percent of its cotton products. That could affect "billions of dollars" worth of imports with material from the region when enforcement scales up, said Department of Homeland Security Acting Deputy Secretary Ken Cuccinelli.
Recent actions: The U.S. action follows DHS’s move in September to issue five narrower WRO orders on hair products, linen and cotton fabrics and computer parts from Xinjiang. And it comes after a Treasury Dept. prohibition this summer on Americans doing business directly with XPCC.
Akin to regional ban, says DHS: Those prohibitions stop short of a region-wide blockade on cotton products from Xinjiang, which produces 85 percent of China’s cotton. But Cuccinelli said XPCC is so embedded in the region’s economy, that blocking its products will have a similar effect on importers as a region-wide ban.
“It is so massive that even though it appears that it’s a single company, from our perspective it is equivalent to a regional WRO,” Cuccinelli said during a briefing announcing the order.
But easier to enact: DHS continues to consider that region-wide ban, he and others said, but declined to issue it on Wednesday because officials believe the company-specific WRO stands on firmer legal ground than a regional ban, and will be easier to enforce.
“As much as we want to go after and target those entities [using forced labor], as an alternative we also don’t want to inadvertently envelop entities into that which are not,” said Acting CBP Commissioner Mark Morgan. “That’s why we are going to continue to investigate and we are not going to issue a region-wide WRO until we feel we can implement that correctly.”
Outside pressure: The move from DHS follows concerted pressure from labor and human rights groups, as well as members of Congress, to halt imports of cotton and agricultural products from Xinjiang.
The House in September overwhelmingly passed legislation similar to the new WRO that would require companies to provide “clear and convincing evidence” that any products imported or sourced from Xinjiang are not made with forced labor.
The Senate, so far, has declined to take up the legislation, despite Republican support from members like Sen. Marco Rubio (Fla.), who sponsored the bill in the upper chamber. Sen. Ben Sasse (R-Neb.) also released a letter Wednesday condemning Nike for what he called an “aggressive lobbying campaign” against the bill.
Enforcement concerns: Apparel producers say they broadly support curbing forced labor, but have expressed concern about a region-wide action, saying it will be hard to trace which products from Xinjiang are made with forced labor, and which are not.
Morgan said the agency “shared those concerns,” and they contributed to why his agency did not issue a broader prohibition.
“The point isn’t just to make announcements, the point is to block goods that fall in the target of being made with slave labor,” Cuccinelli echoed. “That’s the remaining hurdle with respect to a regional WRO and it’s definitely under consideration.”
But trade experts say the XPCC ban will face some of the same enforcement issues as a region-wide blockade. Most XPCC cotton items are delivered to other firms to be made into shirts, jeans and other products, so importers may be unaware if their shipments from China contain banned fibers deeper in the supply chain.
CBP said it expects companies to “self-police” their suppliers, but industry veterans say the agency will still have to decide whether to block shipments if importers claim ignorance at the origin of their cotton.
“CBP is not likely to have much, if any, visibility into whether XPCC produced cotton has made its way into specific shipments of goods imported in the United States,” said John Foote, a partner in the international trade practice at firm Kelley Drye & Warren. “This is likely to raise novel and difficult legal questions around the conditions whereby CBP is authorized to detain and exclude merchandise.”
