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Why CBP’s Giving Li-Ning the Cold Shoulder

U.S. Customs and Border Protection (CBP) said Tuesday that it is detaining merchandise produced or manufactured by Li-Ning Sporting Goods at all U.S. ports of entry because a CBP investigation indicated the company uses North Korean labor in its supply chain.

CBP noted that the Countering America’s Adversaries Through Sanctions Act (CAATSA) prohibits the entry of goods, wares and articles mined, produced or manufactured wholly or in part by North Korean nationals or North Korean citizens anywhere in the world, unless clear and convincing evidence is provided that such goods were not made with forced labor.

Under the act, such merchandise will not be entitled to entry unless the importer provides clear and convincing evidence that their merchandise was not produced with convict labor, forced labor or indentured labor under penal sanctions within 30 days of notice of detention. If the company fails to provide clear and convincing evidence within this timeframe the merchandise may be subject to seizure and forfeiture.

“CAATSA is yet another tool in CBP’s trade enforcement arsenal that allows us to uphold the fundamental value of human dignity and to ensure the goods that enter the United States are free from forced labor,” said AnnMarie Highsmith, executive assistant commissioner of CBP’s Office of Trade.

On Monday, Norges Bank Investment Management, considered the world’s largest sovereign wealth fund, sold off its stake in Li-Ning, a Chinese sportswear company, citing the “unacceptable risk that the company contributes to serious human-rights violations” in the Xinjiang Uyghur Autonomous Region of northwestern China, where reports of genocidal crimes against local Muslim minorities continue to proliferate.

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Norges Bank Investment Management, which operates a $1.3 trillion chest for the Norwegian central bank, said it made its decision following warnings over the forced-labor pitfalls in Li-Ning’s operations. The company’s ethics advisory council pointed to the “well-documented” risks of sourcing cotton and textiles in Xinjiang, along with Li-Ning’s cooperation agreement with suppliers such as Xinjiang Jinfujie Clothing Co., which public information indicates manufactures inside an internment camp and employs workers through a controversial government-run labor-transfer scheme that targets Uyghurs and other ethnic minorities. Li-Ning has stated that it buys and will continue to buy cotton from the region.

In June, prior to Tokyo Summer Olympics, the Indian Olympic Association revealed it was dropping the label as its official uniform sponsor, although this was more due to strained relations between China and India. In the United States, lawmakers have been urging members of the National Basketball Players Association to rethink their ties with brands that knowingly and willingly use Xinjiang cotton, including Li-Ning, which maintains endorsement deals with several NBA players.

Cotton and cotton products from Xinjiang have been outlawed by U.S. customs since January 2021. The Uyghur Forced Labor Prevention Act, which was signed into law in December and will take effect in June, will take that prohibition further by creating a “rebuttable presumption” that all products from Xinjiang are made with forced labor unless “clear and convincing” evidence proves otherwise.

CBP’s action comes after Canadian customs previously seized 100 Reitmans shipments containing apparel believed to be made at a China factory forcing North Koreans to produce the goods, signaling international governments’ heightened attention to labor problems.

Li-Ning Sporting Goods did not respond to a request for comment from Sourcing Journal.