Saturday, July 13, 2024

US blocks imports from 26 more Chinese companies over forced labor concerns

Must read

The U.S. will block imports from dozens of Chinese textile companies over their alleged ties to forced labor, a move that follows U.S. industry complaints about unfair competition.

On Thursday, the Biden administration will announce the addition of 26 companies to what is known as the Uyghur Forced Labor Prevention Act Entity List. The list names businesses that the U.S. alleges are involved in exploiting forced labor from China’s Xinjiang region, home to the Uyghur people and other minority groups.

“We will not allow goods produced in whole or in part through forced labor to enter the United States,” Homeland Security Secretary Alejandro Mayorkas said. “We’re shining a light on it.”

The additions dramatically swell the size of the UFLPA list, which along with a change in methodology, brings the total number of banned companies to 65. All the companies named Thursday are part of China’s textile industry, whose dominance has led to complaints of unfair competition from manufacturers stateside.

The named businesses serve as middlemen, sourcing cotton from Xinjiang and selling it primarily to Chinese companies that use it to spin thread or make fabric. Thursday’s moves are intended to make responsible businesses aware of possible abuse in their supply-chains, Mayorkas said.

The move comes amid a broader U.S. crackdown on the import of goods tied to forced labor, and in particular those from Xinjiang, a region known as a source of cotton, solar panel components and other goods, but also for alleged wide-scale human rights abuses. China has repeatedly denied those allegations.

Under the UFLPA, all imports linked to Xinjiang have been effectively banned since 2022, and U.S. officials have repeatedly urged companies to vet their supply chains.

The list names specific companies whose goods are barred, including as components in a finished product. The specificity can provide more certainty to businesses trying to stay on the right side of the law, but can also lead to headaches for some businesses—Volkswagen, for example, in February said the U.S. impounded thousands of its Bentley, Porsche and Audi vehicles because a part was made by a supplier on the list.

Thursday’s additions could pressure corporate supply chains. China is the U.S.’s single largest foreign source of textiles and apparel, a category of goods that includes clothing as well as components for personal protective equipment and other applications.

U.S. industry groups have complained that China’s textile makers compete unfairly, in part through the use of forced labor, and have called for more action from the government to protect U.S. textile companies.

“China’s unchecked foreign predatory trade practices, coupled with a lack of customs enforcement and misguided trade policy proposals, have created an unstable market dynamic that is threatening the future of domestic textile manufacturing,” Kim Glas, the president of the National Council of Textile Organizations, said Tuesday following the announcement of new tariffs targeting China.

Mayorkas said companies need to gain clearer insight into their supply chains, adding that he was open to criminal prosecutions in instances where companies had attempted to deliberately mislead U.S. authorities.

The Biden administration also has faced pressure to address a provision in trade law that allows the import of packages valued at less than $800 without duty and with little customs scrutiny. Imports via that method, known as the de minimis exemption, have recently surged, with e-commerce companies Shein and Temu alone at one point accounting for nearly a third of them, according to one analysis.

Last month, the Biden administration announced that authorities would give more scrutiny to de minimis shipments as part of a broader push against illicit apparel and textile imports. Mayorkas said he shared industry concerns that “illegitimate or irresponsible” companies might be exploiting the exemption and is looking into possible changes to the law.

Write to Richard Vanderford at Richard.Vanderford@wsj.com

Latest article