The Congressional-Executive Commission on China (CECC) has released its 2019 Annual Report on human rights conditions and rule of law developments in China.  The report says there is a “strong argument” that China has committed “crimes against humanity” in Xinjiang.  The report names products reportedly produced with forced labor, including shoes and textile products, including yarn, clothing, gloves, bedding, and carpet. Additionally, the report names several apparel suppliers that are alleged to have used forced labor in Xinjiang this past year, including Hetian Taida Apparel, Yili Zhou Wan Garment Manufacturing Company, Litai Textiles, Huafu Fashion Company, and Esquel Group.   Four brands also are named for suspicions that there was Xinjiang-based forced labor in their supply chain.  They are:  Adidas, H&M, Nike, and Patagonia. 

The report cites comments from March 2018 by the president of the China National Textile and Apparel Council suggesting that textile manufacturers were working with Xinjiang Uyghur Autonomous Region (XUAR) authorities to exploit detainee labor. More recent reports found that authorities used tax exemptions and subsidies to encourage Chinese garment manufacturers to move production to XUAR. The report quotes German scholar Adrian Zenz’s warning that ‘‘soon, many or most products made in China that rely at least in part on low-skilled, labor-intensive manufacturing, could contain elements of involuntary ethnic minority labor from Xinjiang.’’

The Business and Human Rights section of the report offers several recommendations to Members of the U.S. Congress and Administration officials: 

• Take the necessary steps to prohibit the export of U.S. goods and services to Chinese entities—including government agencies and companies—that have been directly involved in building and supplying the system of internment camps in the XUAR.
• Impose Global Magnitsky sanctions on both Chinese government officials carrying out severe human rights abuses in the XUAR as well as the companies directly complicit in those abuses. U.S. Customs and Border Protection should examine the import of goods made in the XUAR—or containing materials made in the XUAR—and determine whether such imports violate Section 1307 of the Tariff Act of 1930 (19 U.S.C. 1307).
• The Department of Labor should update its list of goods produced with child labor or forced labor to reflect the recent reports of forced labor in the XUAR.
• Hold public hearings and private meetings with companies from their districts to raise awareness of the risks of complicity in human rights abuses that U.S. companies working in China may face, including complicity in possible crimes against humanity in the XUAR; the possibility of goods made with forced labor entering supply chains; and the use of AI technology and surveillance equipment to monitor human rights advocates, religious believers, and ethnic minorities.
• Encourage companies in their districts to engage in appropriate due diligence with regard to potential complicity in human rights abuses.

In a press release, U.S. Customs and Border Protection (CBP) announces the Section 321 Data Pilot. “The Section 321 Data Pilot is a voluntary collaboration with online marketplaces, carriers, technology firms and logistics providers to secure e-commerce supply chains and protect American consumers,” according to CBP.  CBP extended the pilot program to cover both ocean shipments and international mail shipments, and extended the pilot to run through August 2021. The pilot’s participants include e-commerce supply chain companies Amazon, eBay, Zulily, FedEx, DHL and UPS, technology firm PreClear, and logistics providers XB Fulfillment and BoxC Logistics. 

The pilot will allow CBP to test whether the transmission of additional advance data, beyond the data elements currently required for shipments arriving by air, ocean, truck, or rail, will enable CBP to perform more effective and efficient targeted screening with respect to Section 321 shipments.

The Fair Labor Association (FLA) released an issue briefing outlining recommendations for companies to consider in response to the increased risk for forced labor in Xinjiang. The briefing says in the case of Xinjiang, due diligence and remediation are limited and companies “cannot rely on normal due diligence activities to either confirm—or rule out—the presence of forced labor,” and then offers nine recommendations.

Recommendations include:

• Companies should map their product supply chain to determine if the cotton/yarn/textile used in the finished good comes from Xinjiang.
• Companies should presume that raw materials, semi-finished, or finished goods from Xinjiang are likely to be produced with forced labor.
• Companies should recognize the limitations of regular due diligence activities in Xinjiang (restricted access; lack of reliable information; poor remediation options) and presume that, absent a change in government policy and actions, social audits are not likely to effectively detect forced labor and are not likely to provide credible proof of the absence of forced labor.

The full briefing and recommendations are available here. 

The U.S. International Trade Commission (USITC) released a new report, Shifts in U.S. Merchandise Trade 2018. The annual report examines U.S. trade performance for the year, as well as changes within 10 industry sectors and the possible reasons for these changes. 

According to the report, in 2018, U.S. total exports and general imports both increased, reaching their highest levels since 2014. The report also found that China, Canada, and Mexico continued to be the major U.S. trading partners in 2018. China continued to be the main supplier of U.S. imports of merchandise and was the third largest destination of U.S. exports, by value. Canada and Mexico, however, were the largest destinations for U.S. exports and the two countries combined accounted for over one-third of U.S. exports of merchandise in 2018. 

Looking at textiles and apparel, the report found that total U.S. exports of textiles and apparel increased $565 million (2.6 percent) to $22.7 billion in 2018. U.S. exports of textiles and apparel saw growth from 2017 to 2018 in most product groups, but two product groups, carpets and rugs and home furnishings, experienced small declines. Mexico and Canada continue to be the largest markets for U.S. textiles and apparel exports, accounting for 44 percent of the total in 2018.  Fabrics and apparel account for the majority of U.S. exports of these products to Mexico and Canada, accounting for 56 percent of U.S. exports of fabrics and 43 percent of U.S. exports of apparel.

The value of U.S. imports of textiles and apparel rose by $6.3 billion (5.2 percent) to $127.7 billion in 2018. China was the largest supplier of textile and apparel importers to the U.S. Imports increased in all categories, primarily led by an increase in imports of apparel which was attributed to higher consumer spending, and reportedly, to stockpiling in anticipation of higher duties on imports of textiles and apparel from China. Vietnam was the second-largest supplier of textiles and apparel to the United States in 2018, followed by India and Mexico.