A recently-concluded Senate Finance Committee investigation into links between U.S. automakers and forced labor in China revealed “major gaps in automakers’ oversight of forced labor in their supply chains – including two companies that shipped cars or parts to the United States this year that were made with parts from a banned Chinese supplier“, according to committee chair Ron Wyden, D-Ore.
The investigation was initiated in 2022 after a report from Sheffield Hallam University’s Helena Kennedy Centre for International Justice identified 96 companies relevant to the automotive sector operating in the Xinjiang Uyghur Autonomous Region, 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.
Sen. Wyden responded to that report by launching a Finance Committee probe into “the effectiveness of trade-based efforts by the United States to combat forced labor and other serious human rights abuses in China.” Among other findings, the committee’s report asserts that two automakers continued to import certain components from a company that was included on the UFLPA Entity List in December 2023 even after they were informed in writing by a direct supplier that the components in question were made by a listed entity. Another automaker confirmed last February that vehicles it produced for the U.S. market contained a component manufactured by a company added to the UFLPA Entity List in December 2023.
According to the report, the details of these disclosures have heightened Sen. Wyden’s concerns “that automakers do not possess adequate visibility and compliance procedures to keep their supply chains free of forced labor.” The report notes that two of the automakers under scrutiny made voluntary disclosures to U.S. Customs and Border Protection after the Finance Committee contacted them and also contacted the supplier that provided them with the component presumptively made with forced labor.
It is worth mentioning that, despite repeated announcements of its intention to do so, CBP has yet to update its regulations on forced labor and any affiliated voluntary disclosure process.
Sandler, Travis & Rosenberg has a robust program to assist companies 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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