In brief

In July 2020, the United States (US) issued a "Xinjiang Supply Chain Business Advisory" (the "Advisory") to inform businesses of the US government's view of alleged human rights abuses in Xinjiang, China, to outline relevant provisions of US law for enforcement actions and sanctions, and to compel businesses to engage in comprehensive, documented human rights due diligence and implement policies and procedures to address risks.

Consumer goods and retail businesses (CG&R) – both US and non-US – should take note of the Advisory, as it contains an illustrative list of industries in Xinjiang in which alleged labor abuses may be taking place – including apparel, food and beverage, consumer durables and toys.


Contents

  1. Key takeaways
  2. In more detail
  3. Background

Key takeaways

All CG&R businesses with supply chains that run through China should conduct well-documented human rights due diligence, and implement policies and procedures to ensure that goods originating wholly or in part in China are not affected by forced labor, to mitigate the risk of adverse law enforcement activity by the US and other governments, and other business, legal and reputational risks.

In more detail

The Advisory provides information to businesses to consider in assessing their potential exposure to involvement with entities engaged in human rights abuses. It highlights the reputational, economic and legal risks for (1) businesses whose supply chains may be tainted by forced Uyghur labor, and (2) businesses whose goods and services may enable the mass surveillance and internment of Uyghurs and other ethnic minorities in China.

The Advisory:

  • Provides an overview of documented alleged abuses resulting from specific social programs deployed in Xinjiang, China, and describes the risks to businesses of being affiliated with these alleged abuses.
  • Aims to leverage an array of corporate stakeholders — including investors, boards of directors, financial institutions, NGOs, consumers and even other governments — to encourage businesses to assess the human rights implications of sourcing goods from China that could have been made wholly or in part with forced Uyghur labor, or selling technology or services in China that could enable human rights abuses.
  • Provides an overview of relevant provisions of US law, many of which are already being utilized as enforcement tools in response to these alleged abuses, including:
    • Withhold Release Orders issued by US Customs and Border Protection, to prohibit importation of merchandise suspected as being made, wholly or in part, with forced labor;
    • Entity List designations by the US Department of Commerce, to impose export controls on designated entities;
    • Economic sanctions authorized by various provisions of US law; and
    • Criminal law provisions targeting individuals or companies acting with "reckless disregard" for the use of forced labor by commercial counterparties.
  • Cites international standards and best practices for guidance on grounding a well-documented corporate human rights due diligence response.
  • Identifies specific manufacturing industries believed to be affiliated with forced Uyghur labor in or outside Xinjiang, including:
    • agricultural goods (including sugar, stevia, garlic, tomato products)
    • textiles, apparel and footwear (including cotton and cotton products)
    • consumer electronics and components (including cell phones and printing products)
    • toys
  • Identifies specific goods and services which warrant additional care, when sold or provided to parties in China, including biometric devices, cameras, computers, items with surveillance capabilities (including facial recognition), microchips and microprocessors, tracking technology, or related equipment and software, or access to genetic databases.

Background

The US government scrutiny on the treatment of Uyghurs and other Muslim ethnic minorities in Xinjiang emerges in the context of the broader US – China economic relationship and geopolitical tension.

It is also both a cause of, and a consequence from, heightened focus by academic researchers, non-governmental organizations (NGOs), investigative journalists and other sovereign states (including the European Union, the United Kingdom, Australia and Canada) on alleged human rights abuses in Xinjiang.

The government of China largely acknowledges the various social programs faulted by the US government and other concerned parties, but disputes the alleged scale of such programs, and vigorously disputes the allegation of forced labor or human rights abuses, and defends the legitimacy of such social programs as justifiable means for combatting terrorism and alleviating poverty.

The Advisory is accessible here.

The official response of the Government of China to various claims about China's social programs targeting Uyghurs in Xinjiang (among other topics) is accessible here.