The US government is intensifying its efforts to persuade businesses to exit supply chains connected to China’s Xinjiang Uyghur Autonomous Region in light of increasing concerns about the use of forced labour in that area. Broader and stronger warnings about doing business in the XUAR, particularly in specified industries, are included in an updated business advisory issued July 13th.
For more information on how this business advisory could apply to your clients, please contact TLN Member Charles “Chuck” Crowley at +1 (212) 549-0134 or ccrowley@strtrade.com.
The advisory warns businesses, individuals and others (including investors, consultants, labour brokers, academic institutions and research service providers) that do not exit supply chains, ventures and/or investments connected to Xinjiang that they could run a high risk of violating US law and triggering criminal or civil enforcement actions. Potential legal risks include violation of statutes criminalising forced labour (e.g., knowingly benefitting from participation in a venture while knowing it has engaged in forced labour), sanctions violations if dealing with designated persons, export control violations, and violations of the prohibition on imports of goods produced in whole or in part with forced or convict labour.
As a result, the advisory urges businesses and individuals to undertake heightened human rights due diligence to identify potential supply chain links to entities operating in Xinjiang, linked to Xinjiang (e.g., through supply chain inputs), or utilising Uyghur or other ethnic and Muslim minority labourers from Xinjiang. Supply chain exposure could come from sourcing labour or goods from Xinjiang or from entities (1) elsewhere in China connected to the use of forced labour of individuals from Xinjiang or (2) outside of China that source inputs from Xinjiang. The advisory newly adds that exposure could also come from supplying US-origin commodities, software and technology to entities engaged in surveillance and forced labour practices.
The advisory identifies the following industries as being at particular risk concerning the use of forced labour in Xinjiang:
*newly added since last advisory
However, the advisory notes that this list is non-exhaustive and does not confirm that all goods produced in these industries in Xinjiang involve forced labour.
The advisory adds that raw and refined materials, commodities, intermediate goods, byproducts and recycled materials may all have connections to forced labour and human rights violations in Xinjiang, regardless of the final product and region of origin or export.
The updated advisory adds a number of warnings signs of forced labour in the operating environment in Xinjiang. These include the involvement of (1) affiliates of Xinjiang Production and Construction Corps, which are part of the prison labour system and manufacture goods beyond cotton products, (2) goods included on the Department of Labor’s list of goods produced by forced or child labour, (3) companies on the Department of Commerce’s Entity List, and (4) companies and products subject to US withhold release orders.
Sandler, Travis & Rosenberg offers a comprehensive suite of services to help companies address forced labour concerns, including supply chain reviews, due diligence strategies and proactive remediation. In addition, ST&R has launched a new web page (www.strtrade.com/trade-news-resources/tariff-actions-resources/forced-labor-supply-chain-visibility) offering a broad range of information on forced-labour-related efforts in the US and around the world. ST&R also has an on-demand webinar (www.strtrade.com/training/events/on-demand-webinar/supply-chain-transparency-enhancing-visibility-and-eliminating-forced-labor) on forced labour and supply chain transparency available online.
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