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Should US Companies Brace for Xinjiang Crackdown 2.0?

Two Florida Republicans introduced Friday a bill that would direct the U.S. Securities and Exchange Commission (SEC) to require publicly traded companies to report on any direct supply-chain ties with products made with forced labor from China’s Xinjiang Uyghur Autonomous Region.

Introduced by Senators Marco Rubio and Rick Scott, the Transaction and Sourcing Knowledge (TASK) Act, or S. 4095, would also require businesses to declare any transactions with companies that are on the Department of Commerce’s Entity List or the Department of Treasury’s Chinese Military-Industrial Complex Companies List. Both heavily restrict U.S. companies from engaging with those named.

Publicly traded American firms with facilities in China will also have to disclose to the SEC on an annual basis the involvement of any Chinese Communist Party committee in their operations and, if so, the extent of its role in corporate decisions.

Republican Senators Mike Braun of Indiana, Bill Hagerty of Tenessee, Ted Cruz of Texas and Joni Ernst of Iowa are also original cosponsors.

“Far too many American corporations profit from slave labor in China,” Rubio said in a statement. “It is already illegal for these companies to import goods made with slave labor into the United States, and in two months, they will be prohibited from importing any goods from Xinjiang unless they can prove there is no slave labor. These companies must be transparent with their shareholders by disclosing the risks associated with products linked to Xinjiang and with companies complicit in genocide and the use of slave labor.”

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The legislation comes as Customs & Border Protection (CBP) revealed that it will issue letters to importers that may be impacted by the rebuttable presumption outlined in the Uyghur Forced Labor Prevention Act (UFLPA) in advance of its June 21 inception.

The missives will go out to companies that previously imported merchandise that may be subject to the Act to “encourage those importers to address any forced labor issues in their supply chains in a timely manner,” the agency said last month.

The UFLPA, which President Joe Biden signed into law in December, creates a rebuttable presumption that all goods from Xinjiang have been part in whole or in part with forced labor and are therefore barred from entering the United States under Section 307 of the 1930 Tariff Act.

Companies that do not receive this letter aren’t off the hook, CBP cautioned.

“Please note that if you do not receive a letter from CBP, this does not mean that your supply chain is free of forced labor,” it said. “All importers are expected to review their supply chains thoroughly and institute reliable measures to ensure imported goods are not produced wholly or in part with convict labor, forced labor, and/or indentured labor (including forced or indentured child labor).”

The United States isn’t the only country taking action on forced-labor allegations in Xinjiang, where the repression of Uyghurs and other Turkic Muslim minorities has been labeled genocide.

Across the pond, Britain’s National Health Service (NHS) could soon be prevented from buying goods and services produced by or involving modern-day slavery around the world, including Xinjiang. Investigations by the New York Times and others at the height of the pandemic found that some Chinese companies were using Uyghur workers, obtained through a controversial state-sponsored labor program, to produce personal protective equipment such as masks and gowns.

According to Tussell market intelligence, the Department of Health and Social Care snapped up billions of pounds of medical supplies for the NHS from companies with China-linked supply chains as part of a contract bonanza it awarded in 2020 and 2021.

“I want this to be a turning point in the U.K.’s mission to eradicate slavery and human trafficking in supply chains around the globe,” Health and social care secretary Sajid Javid said of the proposed health and care bill amendment in a statement last month. “As the biggest public procurer in the country, the NHS is well placed to spearhead this work.

China, which has vociferously denied any human-rights wrongdoing, recently ratified two International Labour Organization (ILO) conventions to eliminate forced labor.

While the ILO praised the move as a demonstration of China’s “strong support for ILO values” and commitment to “protect any female or male workers from being trapped into forced labor practices,” human-rights campaigners were more skeptical.

“The coalition is deeply concerned that the government of China will use ratification to appear to be taking a firm stance on forced labor, while continuing to operate the largest mobilization of forced labor in the world today—one based on religion and ethnicity,” the Coalition to End Forced Labour in the Uyghur Region said last month. “Indeed, the Government of China continues to deny the fact of widespread and systematic forced labor in the Uyghur region and in factories across China employing forced labor transfers from the Uyghur region.”