A far-reaching bill aimed at barring products made with forced labour in China became law after President Joe Biden signed the bill Thursday.
But the next four months — during which the Biden administration will convene hearings to investigate how pervasive forced labour is and what to do about it — will be crucial in determining how far the legislation goes in altering the behaviour of companies that source products from China.
While it is against U.S. law to knowingly import goods made with slave labour, the Uyghur Forced Labor Prevention Act shifts the burden of proof to companies from customs officials. Firms will have to proactively prove that their factories, and those of all their suppliers, do not use slavery or coercion.
The law, which passed the House and Senate nearly unanimously, is Washington’s first comprehensive effort to police supply chains that the United States says exploit persecuted minorities, and its impact could be sweeping. A wide range of products and raw materials — such as petroleum, cotton, minerals and sugar — flow from the Xinjiang region of China, where accusations of forced labour proliferate. Those materials are often used in Chinese factories that manufacture products for global companies.
“I anticipate that there will be many companies — even entire industries — that will be taken by surprise when they realize that their supply chains can also be traced back to the Uyghur region,” said Laura Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in Britain.
If the law is enforced as written, it could force many companies to rework how they do business or risk having products blocked at the U.S. border. Those high stakes are expected to set off a crush of lobbying by companies trying to ease the burden on their industries as the government writes the guidelines that importers must follow.
“Genuine, effective enforcement will most likely mean there will be pushback by corporations and an attempt to create loopholes,” said Cathy Feingold, the international director of the AFL-CIO. “So the implementation will be key.”
Behind-the-scenes negotiations before the bill’s passage provided an early indication of how consequential the legislation could be for some of America’s biggest companies, as business groups like the U.S. Chamber of Commerce and brand names like Nike and Coca-Cola worked to limit the bill’s scope.
The Biden administration has labelled the Chinese government’s actions in Xinjiang — including the detention of more than 1 million Uyghurs and other predominantly Muslim minorities, as well as forced conversions, sterilization and arbitrary or unlawful killings — as genocide.
Human rights experts say that Beijing’s policies of moving Uyghurs into farms and factories that feed the global supply chain is an integral part of its repression in Xinjiang, an attempt to assimilate minorities and strip them of their culture and religion.
In a statement last week, Jen Psaki, the White House press secretary, said that Biden welcomed the bill’s passage and agreed with Congress “that action can and must be taken to hold the People’s Republic of China accountable for genocide and human rights abuses and to address forced labour in Xinjiang.” She added that the administration would “work closely with Congress to implement this bill to ensure global supply chains are free of forced labour.”
Yet some members of the administration argued behind closed doors that the bill’s scope could overwhelm U.S. regulators and lead to further supply chain disruptions at a time when inflation is accelerating at a nearly 40-year high, according to interviews with more than two dozen government officials, members of Congress and their staff. Some officials also expressed concerns that an aggressive ban on Chinese imports could put the administration’s goals for fighting climate change at risk, given China’s dominance of solar panels and components to make them, people familiar with the discussions said.
John Kerry, Biden’s special envoy for climate change, and Wendy R. Sherman, the deputy secretary of state, separately conveyed some of those concerns in calls to Democratic members of Congress in recent months, according to four people familiar with the discussions.
Sen. Marco Rubio, R-Fla., one of the bill’s lead authors, criticized those looking to limit its impact, saying that companies that want to continue to import products and officials who are reluctant to rock the boat with China “are not just going to give up.” He added, “They’re all going to try to weigh in on how it’s implemented.”
One reason the stakes are so high is because of the critical role that Xinjiang may play in many supply chains. The region, twice the size of Texas, is rich in raw materials like coal and oil and crops like tomatoes, lavender and hops; it is also a significant producer of electronics, sneakers and clothing. By some estimates, it provides one-fifth of the world’s cotton and 45% of the world’s polysilicon, a key ingredient for solar panels.
Xinjiang’s substantial presence in the solar supply chain has been a key source of tension in the Biden administration, which is counting on solar power to help the United States reach its goal of significantly cutting carbon emissions by the end of the decade.
In meetings this year, Biden administration officials weighed how difficult it would be for importers to bypass Xinjiang and relocate supply chains for solar goods and other products, according to three government officials. Officials from the Labor Department and the United States trade representative were more sympathetic to a far-reaching ban on Xinjiang goods, according to three people familiar with the discussions. Some officials in charge of climate, energy and the economy argued against a sweeping ban, saying it would wreak havoc on supply chains or compromise the fight against climate change, those people said.
Ana Hinojosa, who was the executive director of Customs and Border Protection and led the government’s enforcement of forced labour provisions until she left the post in October, said that agencies responsible for “competing priorities” like climate change had voiced concerns about the legislation’s impact. Companies and various government agencies became nervous that the law’s broad authorities could prove “devastating to the U.S. economy,” she said.
“The need to improve our clean energy is real and important, but not something that the government or the U.S. should do on the backs of people who are working under conditions of modern-day slavery,” Hinojosa added.
In a call with House Speaker Nancy Pelosi of California this year, Kerry conveyed concerns about disrupting solar supply chains while Sherman shared her concerns with Sen. Jeff Merkley, D-Ore., according to people familiar with the conversations.
Merkley, one of the lead sponsors of the bill, said in an interview that Sherman told him she was concerned the legislation was not duly “targeted and deliberative.” The conversation was first reported by The Washington Post.
“I think this is a targeted and deliberative approach,” Merkley said. “And I think the administration is starting to see how strongly Republicans and Democrats in both chambers feel about this.”
A State Department official said that Sherman did not initiate the call and did not express opposition to the bill. Whitney Smith, a spokesperson for Kerry, said any accusations he lobbied against the Uyghur Forced Labor Prevention Act were “false.” Pelosi declined to discuss private conversations.
Nury Turkel, a Uyghur American lawyer who is the vice chairman of the U.S. Commission on International Religious Freedom, said the United States must “tackle both genocide and ecocide.”
“Policymakers and climate activists are making it a choice between saving the world and turning a blind eye to the enslavement of Uyghurs,” he said. “It is false, and we cannot allow ourselves to be forced into it.”
Administration officials have also argued that the United States can take a strong stance against forced labour while developing a robust solar supply chain. Emily Horne, a spokesperson for the National Security Council, said that Biden “believes what is going on in Xinjiang is genocide” and that the administration had taken a range of actions to combat human rights abuses in the region, including financial sanctions, visa restrictions, export controls, import restrictions and a diplomatic boycott of the 2022 Beijing Olympics in February.
“We have taken action to hold the PRC accountable for its human rights abuses and to address forced labour in Xinjiang,” Horne said, using the abbreviation for the People’s Republic of China. “And we will continue to do so.”
The law highlights the delicate U.S.-China relationship, in which policymakers must figure out how to confront anti-Democratic practices while the United States is economically dependent on Chinese factories. China remains the largest supplier of goods to the United States.
One of the biggest hurdles for U.S. businesses is determining whether their products touched Xinjiang at any point in the supply chain. Many companies complain that beyond their direct suppliers, they lack the leverage to demand information from the Chinese firms that manufacture raw materials and parts.
Government restrictions that bar foreigners from unfettered access to sites in Xinjiang have made it difficult for many businesses to investigate their supply chains. New Chinese anti-sanctions rules, which threaten penalties against companies that comply with U.S. restrictions, have made vetting even more difficult.
The Chinese government denies forced labour is used in Xinjiang. Zhao Lijian, a government spokesperson, said U.S. politicians were “seeking to contain China and hold back China’s development through political manipulation and economic bullying in the name of ‘human rights.’” He promised a “resolute response” if the bill became law.
Lawmakers struggled over the past year to reconcile a more aggressive House version of the legislation with one in the Senate, which gave companies longer timelines to make changes and stripped out the SEC reporting requirement, among other differences.
The final bill included a mechanism to create lists of entities and products that use forced labour or aid in the transfer of persecuted workers to factories around China. Businesses like Apple had lobbied for the creation of such lists, believing they would provide more certainty for businesses seeking to avoid entities of concern.
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