The American public is gearing up for a presidential election in less than a week that has polarized much of the nation. Opinions and aversions run deep among many with regard to the candidates’ policies and starkly contrasting temperaments.
Members of the fashion sector remain focused on making the most of the remainder of a year riddled with operational and financial potholes. For many, supply chains were decimated as the Covid crisis swept the globe earlier this year, and consumer appetites for non-essential items, like footwear and apparel, remain as shaky as the economy.
However unforeseen these latest challenges, one conundrum has remained constant. For decades, American brands have been heavily dependent upon China for sourcing and manufacturing—some placing all of their proverbial eggs in the country’s wide-open basket. Over the past few years, attitudes and actions have begun to shift, with a slow-and-steady exodus taking place due to concerns about the country’s economy, rising labor costs, and of course, an ongoing, margin-busting trade war that shows little sign of ending.
In recent months, too, rumblings of China’s widespread human rights abuses have solidified into concrete calls for accountability and action. The internment and perverse exploitation of Uyghur Muslims and other ethnic and religious minorities have now proliferated well beyond the Xinjiang Uyghur Autonomous Region (XUAR), with the Chinese government facilitating the movement of people throughout the country and its supply chains.
U.S. legislators on both sides of the aisle have become increasingly vexed by China’s actions, and those tensions have reached a boiling point. In late September, the House of Representatives China Task Force (CTF), made up of a contingent of congressmen led by Chairman Michael McCaul (R-Texas), released a comprehensive report detailing 400 forward-leaning recommendations aimed at punishing China’s misdeeds. On Oct. 19, the CTF subsequently introduced the China Task Force Act, combining 137 of the group’s most pressing legislative recommendations on issues like ideological competition, supply-chain security, economic competitiveness and technology—89 of which garnered bipartisan support—into immediately actionable legislation once passed by the Senate.
Much of the group’s focus revolves around areas related to national security, like U.S. dependence on China for valuable technologies including semiconductors and medical drugs, personal protective equipment and devices that have become vital for survival in recent months. But legislators have also recognized the need for broader supply chain independence from the country, which has demonstrated malicious intent through its predatory dealings and country-wide contamination of supply chains with mistreated minorities.
The CTF’s recommendations heavily focus on these abuses. After years of thinly veiled aggression against the U.S., the ignominy of China’s crimes against its own people appears to have united both American political parties in shared disdain. “We must refuse to be complicit, financially or otherwise, in the Chinese Communist Party’s crimes against the Muslim Uyghurs,” Chairman McCaul told Sourcing Journal. “This is not a Republican or Democrat issue, but an American issue.”
Rep. Jim McGovern (D-Mass.), who sponsored the Uyghur Forced Labor Prevention Act included in the CTF’s list of more urgent recommendations, explained that the proposed legislation would restrict the flow of Chinese goods made under duress, with U.S. Customs and Border Protection (CBP) tasked with keeping these products from falling into the hands of U.S. consumers.
The law “creates a ‘rebuttable presumption’ that all goods produced in Xinjiang are made with forced labor,” he said, “prohibiting all imports unless an importing business demonstrates to CBP that forced labor was not used in the production of that good through ‘clear and convincing’ evidence.”
The assumption of guilt is imperative because it has become “nearly impossible to do effective due diligence” in the province, he added. “Under the circumstances of pervasive surveillance and police presence and the intimidation of workers, no company can ensure clean supply chains from Xinjiang.”
The congressman believes there is “compelling evidence” that Uyghur Muslims have been sent to regions throughout the country to work in factories of all kinds. In July, Washington’s Center for Strategic & International Studies also found that virtually the entire Chinese apparel industry is tainted by slave labor, with 80 percent of the country’s cotton produced in Xinjiang factories.
Rep. McGovern’s sponsored legislation includes new measures to target those responsible for the cross-country movement of people, including Chinese officials caught trafficking Uyghurs to other parts of China. “We must do our best to deny the economic incentives for the use of forced labor,” he told Sourcing Journal. Imposing visa and financial sanctions on perpetrators is a key component of the strategy outlined in the legislation, with the goal being to “crack down on any entity or individual complicit in these crimes against humanity,” he added.
Rep. McGovern was also clear that American businesses have a major role to play in addressing the issue—and a moral obligation to act now. For more than two years, U.S. companies and those across the globe have covered their ears when faced with revelations that their own supply chains have been built on the backs of the enslaved, he said.
“It is long past time for these companies to reassess their supply chains and find alternatives that do not exploit labor and violate human rights,” he said. “Their failure to do so has led U.S. consumers to unwittingly purchase goods made with forced labor. That must end.”
And according to a CTF aide from the Republican Foreign Affairs Committee, conservative members of Congress who might typically favor laissez-faire policies when it comes to free and unencumbered trade agree. Most have reached the conclusion that certain supply chains—those that have an outsized impact on national security, and those that materially affect the everyday American consumer—should be wrenched away from China’s manipulation and control.
In addition to sanctioning China for its bad acts, the China Task Force Act aims to help build out other sourcing and manufacturing ecosystems in ally markets, and at home, through tax incentives and proposed trade agreements.
One bipartisan piece of legislation signed into law in spring of 2019—the Championing American Business Through Diplomacy Act—was included in the CTF report recommendations in September with new proposed actions. The law helps arm American businesses with information gleaned from government agencies like the Department of State and Department of Commerce, as well as U.S. diplomatic missions worldwide, to help them understand China’s influence on businesses, like manufacturing, in other nations. As companies increasingly look to diversify sourcing away from China, the law makes governmental guidance available, highlighting legitimate sourcing alternatives that are free from corruption. It also helps forge stronger bonds between the U.S., its allies and potential partners, making the president responsible for negotiating with other nations to support new supply-chain infrastructure investment overseas.
According to Chairman McCaul, who sponsored the legislation, the Championing American Business Through Diplomacy Act “will bolster U.S. economic and commercial diplomacy, help facilitate greater market access for our companies in emerging markets, and rededicate the Foreign Service to one of its founding missions of advancing U.S. business interests abroad.”
The U.S. relationship with China is undeniably fraught, and legislators across the board believe that working to forge inroads in alternative markets is a must. But a total breakup with the country is likely an impossibility, according to CTF member Rep. Darin LaHood (R-Ill.).
“China is the second-largest economy in the world, and in my opinion it is inconceivable that we would completely decouple from them,” he said. The country’s growing middle class is an important trade market for U.S. companies across multiple industries, he added, as well as for farmers and manufacturers like those in the Midwest.
Rep. LaHood believes a healthy trading relationship with the country is possible, but will require “equal buy-in to the same standards and rules by the Chinese.” In the congressman’s opinion, that working relationship begins with China meeting the obligations laid out in the Phase One trade deal signed into law in January, which stipulated that China increase its purchases of U.S. products and services by at least $200 billion over the course of the next two years.
“I am generally not a fan of tariffs, which are taxes on our producers and consumers, but President Trump used them effectively with China to get them to the table on the Phase One deal,” the congressman said. “Holding them accountable to the agreement is critical, and if they fail to meet their obligations then the U.S. can re-impose tariffs.” A possible Phase Two agreement would likely focus more on enforcement actions and additional reforms to the two countries’ economic and trade relationship.
While Rep. LaHood is optimistic that the administration can make it to Phase Two and forge a healthier, if imperfect, relationship with China, the emergence of a global pandemic has also accelerated a shift in focus.
“I do believe there is an appetite in the business community and among workers to bring certain jobs back to the United States,” he said. “It’s something that both parties and presidential candidates have emphasized in their economic platforms as well.”
In his home state of Illinois, the congressman said constituents have been vocal about the dearth of well-paid manufacturing jobs. Congress should use the tax code to incentivize the return of these jobs to stateside makers, he said, through efforts like the Bringing Back American Jobs Through Intellectual Property Repatriation Act, which was included in the CTF report.
“My bill would unlock the door for American companies that want to come home by allowing them to bring back their IP developed offshore without any immediate U.S. tax cost,” he said. The effort would serve to make American supply chains more independent while raising the standard of living for citizens impacted by job loss in the wake of the coronavirus. “From a public policy perspective, we should also be focused on workforce training, apprenticeships, and utilizing other tools and resources to better prepare are workers,” he said.
“The pandemic has taught us that we need to take a good look at our global supply chains and identify where we may have strategic concerns, taking efforts to shore up those product lines,” he added.