New US Government Advisory on Xinjiang
July 13, 2021
The US government today issued a new “Xinjiang Supply Chain Business Advisory“. As you know, US customs authorities have already banned the import of any apparel containing cotton from Xinjiang because of widespread forced labor. The sobering content of this new guidance to businesses underscores the large and growing risk to any company still sourcing from the region.
The advisory cites “the significant reputational, economic, and legal risks” of doing business with any supplier, or other company, that is operating in or is linked to Xinjiang. The advisory states that “businesses and individuals that do not exit supply chains, ventures, and/or investments connected to Xinjiang could run a high risk of violating U.S. law.”
The advisory describes the virtual impossibility of conducting labor rights audits in Xinjiang and states explicitly that “In and of themselves, third-party audits are not a sufficient due diligence program.”
Among the legal risks the advisory enumerates are the following:
- “violation of statutes criminalizing forced labor, including knowingly benefitting from participation in a venture, while knowing or in reckless disregard of the fact that the venture has engaged in forced labor;” and
- “violation of the prohibition of importations of goods produced in whole or in part with forced labor…”
The WRC has provided guidance specifically to university licensees that compliance with their labor rights obligations to universities, and with US law, requires that they cease any sourcing of inputs from Xinjiang. This new US government advisory outlines the broader risk environment facing all businesses connected to Xinjiang, through sourcing or any other business relationship.
The advisory was issued by the Departments of State, Treasury, Homeland Security, Labor, and Commerce and by the Office of the US Trade Representative. The full text can be found here.
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