Three months after a report documenting the automotive industry’s “reliance on forced labor and other exploitation” in China’s Xinjiang Uyghur Autonomous Region first raised the prospect of enforcement actions against imports of automotive products and parts, Senate Finance Committee Chair Ron Wyden, D-Ore., is keeping the issue in the spotlight by expanding a related investigation.
The report from Sheffield Hallam University’s Helena Kennedy Centre for International Justice identified 96 companies relevant to the automotive sector operating in the XUAR, more than 40 auto sector manufacturers in China that are sourcing from the XUAR or from companies that have accepted Uyghur labor transfers across China, more than 50 international auto parts or automobile manufacturers sourcing directly from companies that are operating in the XUAR or have accepted Uyghur forced labor transfers, and more than 100 international auto parts or automobile manufacturers that have some exposure to forced Uyghur labor-made goods.
Elise Shibles, who heads ST&R’s forced labor practice, said reports like this one have typically been precursors to U.S. Customs and Border Protection enforcement activity against named industries and entities.
Sen. Wyden responded to the report by launching a committee investigation into “the effectiveness of trade-based efforts by the United States to combat forced labor and other serious human rights abuses in China.” As part of that investigation he sent letters asking eight major automakers to provide a range of related information, including whether (1) they have mapped and analyzed their supply chains for links to the XUAR or third-country suppliers with links to the XUAR, (2) their supply chains include any raw materials, mining, processing, or parts manufacturing linked to the XUAR that are imported directly into the U.S., (3) they have ever limited or ended a commercial relationship with a supplier because of XUAR concerns, and (4) any of their shipments have been detained, excluded, or seized in the U.S. for forced labor concerns.
However, Wyden said recently that the responses to these letters “failed to provide specific details about how corporations oversee supply chains to ensure no goods made with forced labor are used in autos, often claiming that suppliers had responsibility for ensuring that their supply chains are free of forced labor.”
As a result, on March 28 Wyden sent another round of letters asking the automakers for more information about their suppliers. He acknowledged the value of “asking upstream suppliers to adhere to a code of conduct” but said this step “must be the beginning of a continuous process that ensures that no participant in a company’s supply chain produces components using forced labor.” He therefore requested information on whether the automakers maintain a list of the foreign-language names of their suppliers, conduct any due diligence using those names, or review suppliers’ foreign-language publications for indications of links to the XUAR. He also asked for a list of each automaker’s five largest Tier 1 suppliers that have any direct or indirect sub-suppliers in China.
Wyden also expanded his investigation to include four Tier 1 suppliers. He explained that a recent congressional hearing raised serious questions about their ability to ensure their sub-suppliers do not rely on forced labor, citing in particular testimony “about Chinese companies faking labor rights compliance and about the unreliability of even on-the-ground audits of suppliers in China.” He therefore asked the four suppliers to provide information about how they source materials and oversee their supply chains, using questions largely identical to those posed to automakers.
Sandler, Travis & Rosenberg has a robust program to assist companies, including in the automotive sector, on forced labor issues. ST&R also maintains a frequently updated web page offering a broad range of information on forced labor-related efforts in the U.S. and around the world. For more information, please contact ST&R at supplychainvisibility@strtrade.com.
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