New U.S. Measures on Xinjiang Produced Goods to come into Law June 2022
From June 16, 2022, any company wishing to import goods to the United States from the Xinjiang Uyghur Autonomous Region will have to demonstrate with “clear and convincing evidence” that the imports do not include forced labour in its supply chain. The new piece of legislation will last 8 years or until the President determines the Xinjiang human rights issues resolved.
This move by the U.S. Government demonstrates a strengthening of previous sanctions on goods produced in the XUAR involving forced labour. Presumption of forced labour involvement is the most significant change, considering all goods coming out of the region effectively ‘guilty until proven innocent’ according to the ethical standards set out in the Uyghur Forced Labour Prevention Act (UFLPA).
The UFLPA is based on Section 307 of the Tariff Act (1930) which prohibits the importation of merchandise “mined, provided or manufactured wholly or in part” in a foreign country by forced, indentured, or convict labour.
The UFLPA strategy is required to provide guidance for importers with respect to:
Due diligence and supply chain management measures that importers may adopt in relation to items produced using Chinese labour
The type, nature, and extent of evidence that demonstrates that items produced in China were not, in fact, produced in the XUAR
The type, nature, and extent of evidence that demonstrates that items originating in China, including goods detained at the US border, were not produced using forced labour
Guidance is expected to follow the announcement before June.
The longstanding issues between the U.S. administration and China over the alleged human rights abuses in the XUAR can be traced back to before the pandemic, with Withhold Release Orders (WROs) being issued by the U.S. Customs and Border Protection agency in September 2019. Goods impacted by these WROs included silica-based products, garments, and cotton.
January 2021: The Foreign Secretary announced a range of measures including review of export controls, updated business guidance and new measures relating to products with possible links to human rights abuses in Xinjiang. They also announced a ministerial led campaign of business engagements and financial penalties for non-compliance with the Modern Slavery Act.
July 2021: The UK Foreign Affairs Select Committee (FASC) published the “Never Again” report, outlining the UK’s responsibility to act on the human rights issues in Xinjiang. This included calls for government boycotts of all cotton products originating from the XUAR and an extension of such a ban to other industries. The report also called for the mobilisation of multilaterals to put pressure on the Chinese Government and our international partners to protect UK supply chains from being used to profit from abuses.
October 2021: The United Kingdom signed a joint statement alongside 42 other countries expressing cross-regional concern over the “political re-education” camps in the XUAR, decrying the reports of widespread human rights abuses towards the Uyghur minority population. This joint statement urged China to clean up its act and comply with national and international obligations on the protection of human rights.
November 2021: The UK government accepted several of the “Never Again” reports’ recommendations, including the raising of concerns to UNESCO over the cultural destruction in Xinjiang, as well as the need to engage with and understand the needs of the Uyghur diaspora in the UK. The Government refused to declare that the Chinese government actions taking place in Xinjiang constituted a genocide.
December 2021: Government Minister Penny Mordaunt makes a statement to POLITICO saying that that government is looking ‘very, very carefully at’ policy on Xinjiang, with prominent conservative MPs urging alignment with Washington. Tom Tugendhat, chair of the FASC, said that the U.K. “shouldn’t be buying goods from Xinjiang made with slave labour” a view echoed by MPs Iain Duncan Smith, Nusrat Ghani and Tom Loughton, all of whom called for an import ban.
Implications for the UK
This move is likely to produce considerable challenges for many U.S. importers of Chinese goods. With the highly integrated nature of supply chains, this could also create issues for tech companies operating in the UK, as well as U.S. subsidiaries of UK based tech companies. Supply chain due diligence is an important trend in 2022, with the EU mandatory human rights and environmental due diligence expected to be announced in the spring, and the UK hinting at updating its Modern Slavery Act in due course.
The step taken by the U.S. to impose what is effectively a total import ban, in conjunction with the timeline and direction of the UK’s policy on Xinjiang produced goods, it would be reasonable to expect an announcement from the UK government shortly. There is a desire from the UK political establishment to be world leaders in supply chain transparency, building on the Modern Slavery Act.