A new report could serve as the impetus for the U.S. to start detaining imports of gold and other minerals, and products made with those minerals, mined in China’s Xinjiang Uygur Autonomous Region.
The Uyghur Forced Labor Prevention Act requires U.S. Customs and Border Protection to presume that all goods manufactured wholly or in part in the XUAR are made with forced labor and therefore prohibited from entry into the U.S. The UFLPA specifies tomatoes, cotton, and polysilicon as high-priority sectors for UFLPA enforcement, and products from aluminum to batteries to tires have been added as sectors of concern since the law’s enactment.
C4ADS, a global security think tank, recently published a report asserting that gold and other minerals extracted from the XUAR are linked to global supply chains and investment and are at high risk of being produced through forced labor or in conditions of human rights violations.
According to the report, reporting under a U.S. law on conflict minerals indicates that hundreds of major U.S. companies are directly or indirectly exposed to suppliers that source gold from companies with XUAR-based mines that exhibit risk indicators of forced labor and thus may violate the UFLPA. Further, the report asserts, major asset management firms’ index fund portfolios include companies that own XUAR mines associated with forced labor and human rights violations. In addition, major Chinese mining companies with a footprint in the XUAR have successfully obtained accreditations that may encourage global buyers and investors to trust the provenance of the gold and conduct purchases or investments that facilitate human rights crimes.
The report notes that while it focuses on gold, “this is but one of the many globally traded minerals produced by the XUAR mining sector that is entangled with the Chinese government’s violent campaign of repression against Turkic peoples,” and global companies that are exposed to Chinese corporate actors involved in these activities via trade or investment connections are at risk of profiting from forced labor. For U.S. importers, this may violate the UFLPA.
Based on previous actions, CBP could begin detaining imports of gold and minerals, and products incorporating them, under the UFLPA and asking importers to trace these items and materials back to their origin. As a result, companies should act now to map their supply chains and ensure their supply chain partners are maintaining sufficient records to prove UFLPA compliance.
Sandler, Travis & Rosenberg offers a comprehensive suite of services to help companies address forced labor concerns around the world, including supply chain reviews, due diligence strategies, and proactive remediation. 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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