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Costco Disavows Links to CBP-Sanctioned Factory

New information has surfaced about the unexpected crackdown by U.S. Customs and Border Protection (CBP) on a slew of foreign goods alleged to have been produced with forced labor.

Costco has come under fire for a recently placed order for baby pajamas from a clothing manufacturer in Xinjiang, China, which was sanctioned by CBP last week for allegedly imprisoning ethnic minorities and forcing them to sew clothing against their will.

On Oct. 1, the CBP announced that it had issued five Withhold Release Orders (WROs) stemming from information obtained through an investigation that pointed to the perpetuation of modern slavery by foreign manufacturers, including an apparel factory.

The orders were issued against a Chinese clothing manufacturer (Hetian Taida Apparel Co.), a disposable rubber glove manufacturer from Malaysia, gold mines in the Democratic Republic of Congo, diamonds mines from Zimbabwe and bone char manufacturers (which create products used to remove contaminants in U.S. water systems) from Brazil.

The Associated Press first exposed the conditions at Hetian Taida in 2018, reporting that the apparel manufacturer had been holding Uighurs, Muslims and other ethnic minorities involuntarily at an internment and labor camp.

Following the revelations, North Carolina buyer Badger Sportswear halted its imports from the manufacturer. Shortly thereafter, Hetian Taida stopped shipping to the U.S. altogether. That is, until last month, when Costco placed its first orders with the company.

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The AP has unearthed new evidence showing that Costco placed orders for baby pajamas from Hetian Taida as recently as Sept. 21 and Sept. 26.

Numerous internment camps have cropped up in the Xinjiang region. According to the AP, some estimate that 1 million Muslims are currently being detained there and persecuted for their religion, while also being forced to work for manufacturers that service American brands.

In 2018, Worldwide Responsible Accredited Production (WRAP) audited a facility bearing the name Hetian Taida, located within an industrial park, and did not uncover any indicators of forced labor being used there. The organization added that it does not audit entire supply chains, and could “only speak to conditions in the specific facilities we have audited.”

“Any question about how a particular brand or retailer operates with regards to its contractors or subcontractors is not one that we would have any insights into,” WRAP told Sourcing Journal. The organization said that the results of the 2018 audit report were private, and could not be disseminated without the factory’s explicit permission.

In an emailed statement, a representative for Costco denied that its baby pajamas were sourced from the Hetian Taida factory in question.

“The sleepers that had been on sale at Costco until very recently were sourced from factories outside the Xinjiang region and without connection to the entity that was recently named as the subject of a detention order by the Customs and Border Patrol,” the statement read. “Those factories were the subject of favorable audits for labor practices and have not been accused of wrongdoing.”

Costco added that although it had also recently sourced products from a factory in Xinjiang, the company has not received any of those orders, and insisted that the factory they had engaged for the orders was “the subject of favorable audits that showed the absence of forced labor and other favorable results.”

Still, “out of an abundance of caution,” the company has suspended sales of the products “pending further investigation and developments.”

In 2016, the U.S. signed a measure into law making it illegal to import goods that are thought to be made using forced labor in any capacity. The law covers the mistreatment of convicts, indentured persons and children. Last week’s show of force against offending manufacturers was an anomaly, however.

While the law likely seems an obvious necessity to many American consumers, prior regulations on foreign goods were much less stringent.

Before 2016, the Tariff Act represented the only measure to validate the seizure of shipments where forced labor was suspected. The Act hinged upon the concept of “consumptive demand,” which indiscriminately allowed imports into the country regardless of how they were produced, providing that there was not enough domestic supply to satisfy the demand.

According to the AP, the Act was only enforced 39 times over the course of 85 years because of this contingency.

Costco officials told the publication this week that they believed the baby products “were made in a factory other than the one that was the subject of the CBP detention order.” They added that they were prepared to consider what actions they would take “relative to the issue of a supplier to our supplier owning factories that may have problems.”

The AP reported that as recently as last weekend, microfleece zippered pajamas thought to be manufactured by Hetian Taida were still being sold under the label Absorba for $14.99 per pair in some Costco stores.

Editor’s note: This article was updated with clarifying statements from Costco and from WRAP.