The federal government is reiterating the urgency for businesses to undertake due diligence measures to make sure their supply chains do not involve the use of forced labor in China’s Xinjiang Uyghur Autonomous Region.
In July 2021 a multi-agency advisory warned businesses, individuals, and others that do not exit supply chains, ventures, and/or investments connected to the XUAR that they could run a high risk of violating U.S. law and triggering criminal or civil enforcement actions. The advisory thus urged businesses and individuals to undertake heightened human rights due diligence to identify potential supply chain links to entities operating in the XUAR, linked to the XUAR (e.g., through supply chain inputs), or utilizing Uyghur or other ethnic and Muslim minority laborers from the XUAR. The advisory also identified a number of industries as being at particular risk concerning the use of forced labor in the XUAR.
The agencies involved have now issued an addendum to that advisory asserting that since it was issued Chinese authorities have not taken any steps to change policies in response to mounting public concern over the contamination of international supply chains with goods produced by state-sponsored forced labor there. To the contrary, addendum states, the Chinese government and affiliated commercial entities have continued to engage in a concerted campaign to dispel these accusations through vehement denial in public messaging; state-ordered, politically-motivated academic research; falsified cotton production and harvest mechanization data; localized propaganda campaigns targeting consumers in trade partner countries; the establishment of false supply chain policy initiatives as alternatives to preexisting international monitoring and compliance programs; new sanctions on foreign government officials critical of Chinese abuses; and pressure on international companies.
The addendum highlights (1) reports about the ongoing, widespread, and pervasive risks in supply chains posed by state-sponsored forced labor and other human rights abuses in the XUAR and (2) the urgency for businesses to undertake appropriate human rights due diligence measures, as described in a 2022 strategy document. Specific information included in this addendum includes the following.
- updated information about U.S. government actions taken in response to human rights abuses in and in connection to the XUAR, including the issuance of withhold release orders by U.S. Customs and Border Protection, the addition of entities to the Department of Commerce’s Entity List, the imposition of economic sanctions by the Treasury Department, the imposition of visa restrictions by the State Department, and the addition of goods to the Department of Labor’s list of goods produced by child labor or forced labor
- information on forced labor in the XUAR silicon and polysilicon supply chain and the prevalence of inputs sourced from XUAR
- a list of other countries’ regulatory provisions and information on forced labor in supply chains
- reports from both government and non-government sources related to continuing, widespread, state-sponsored forced labor and intrusive surveillance in and related to the XUAR
- information related to the various kinds of risks and potential exposure to state-sponsored forced labor and human rights abuses related to the XUAR
- the State Department’s guidance on implementing the United Nations Guiding Principles on Business and Human Rights for transactions linked to foreign government end-users for products or services with surveillance capabilities
- information for investors in Chinese companies linked to surveillance in the XUAR
- information on due diligence related to banking, financial institutions, and other investors
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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