Forced termination of labor in Xinjiang: a new standard for importers and corporate arrears

Overview

On December 23, 2021, President Biden signed into law a landmark part of the law that bans the importation of goods from the entire region due to the high risk of serious forced labor. The law – the Uyghur Forced Labor Prevention Act (HR 6256) – has been in the works of Congress for several years and came after multiple repeats failed to move forward.

The law was passed with overwhelming support from both Republicans and Democrats, reflecting a clear consensus in Washington that the persecution of Uighurs and other Turkish minority communities in Xinjiang and forced labor violations required a strong policy response. In the days before Congress passed the measure, the White House gave its full support to the law and said it would work closely with Congress to make it effective. In addition, human rights activists, civil society organizations, and clothing companies are welcoming the law as a historic victory in promoting the abolition of modern slavery in the supply chain.

The passage of the law comes after the Trump and Biden administrations announced that the Chinese government’s policy in the Xinjiang region is of a genocidal nature, based on indisputable evidence that China’s social program in Xinjiang is forcing minorities to abandon their cultural and religious practices. To forcibly sterilize. Earlier this year, the Biden administration took the additional step of issuing an inter-agency business advisory that warned of significant legal and reputational risks faced by companies emanating from Xinjiang and / or conducting commercial activities in the region.

Beijing’s mass mobilization strategy also includes the deployment of Xinjiang minorities in Chinese factories, where they are forced to produce goods and products that are often exported around the world, including the United States. Due to the intervention of the Chinese government, human rights organizations have stated that it is impossible for third party auditors to verify for sure that the working conditions at the facilities comply with the most basic expectations for the freedom of basic workers determined by internationally recognized labor. The value

Key features of the law

The Uyghur Forced Labor Prevention Act fundamentally changes how the U.S. government restricts the importation of manufactured goods, and this measure will be a major consequence of the design of appropriate labor programs for affected companies.

The most important elements of the law include:

(1) to make a broad assumption that all products, partially or completely manufactured in Xinjiang, are derived from compulsory labor inputs and are therefore prohibited from entering the United States.

(2) Allowing the refutation to be made only if an importer can make an argument on the basis of “clear and credible” evidence that the goods in question were not in fact manufactured by force.

(3) Imposing restrictions on entities that knowingly facilitate forced labor in Xinjiang and / or knowingly assisting in terms of prohibiting imports of goods from Xinjiang.

The law marks the first time that Congress has imposed import bans on all products whose origins can be traced to a specific geographical area, where in the past import bans targeted a specific commercial sector (such as agriculture, clothing and electronics in Xinjiang). , And consequently certain companies are active in that commercial sector.

Major U.S. multinational lawmakers have been persuaded to remove provisions from earlier versions of the law requiring companies listed with the U.S. Securities and Exchange Commission (SEC) to disclose details of their activities in Xinjiang. Disclosure Requirements Companies involved in Xinjiang’s activities may face sanctions or criminal penalties. Nevertheless, companies may still face potential sanctions if they contribute to forced labor in the region or assist importers in violating import sanctions.

Preparing to work for close reasons on forced labor

As a result of the new import ban, countless companies across the wider industry will take steps to re-evaluate their supply chain practices and require stricter diligence protocols for multinationals whose activities risk materially associating with Xinjiang. For example, a March 2020 report from the Australian Strategic Policy Institute found that 83 global brand supply chains were involved in forced labor by Xinjiang minorities.

As a matter of agreement, organizations at risk of being affected by the new law must ensure that their appropriate labor structure is specifically dedicated to preventing forced labor in Xinjiang. At the same time, the law will provide guidelines to those organizations as they consider how to structure their work ethic. In particular, the law establishes new U.S. guidelines on improper diligence, supply chain tracing, and supply chain management measures for importers to prevent the importation of manufactured goods from forced labor in Xinjiang. In addition, the guidelines will more clearly define the “clear and credible” threshold for competing with import bans, explaining “type, nature and amount of evidence” that imported products are not actually from Xinjiang.

The Uyghur Forced Labor Prevention Act is a guiding law that could potentially restrict imports to the United States more broadly than is thought to have been done with forced labor targeting other regions. Lawmakers were aware that Chinese authorities were forcing Xinjiang minorities to work in manufacturing facilities not only in Xinjiang but also in other parts of China. The law seems to address this, especially since the guidelines will provide details of the evidence needed to prove that imported goods are not involved in forced labor in any part of China. Outside of China, lawmakers can use the law as a basis for additional restrictions on all products imported from other parts of the world, where the risk of forced labor is high. While such an extension of the import ban is unlikely to be implemented any time soon, companies should consider this possibility when planning their long-term human rights strategy.

Tendency to work for compulsive reasons

The Uyghur Forced Labor Prevention Act narrowly focuses on forced labor, but the law is part of an illustrative example of the mandatory requirement for perseverance due to human rights in the corporate sector and away from voluntary standards. Like other recent steps, the law will require more sophisticated strategies to identify and prevent corporate contributions to human rights abuses.

In March 2021, the EU Parliament passed an explicit measure that paved the way for mandatory regulation to determine the corporate responsibility of care centered around the proper execution and disclosure of a company’s efforts to remedy human rights violations.

And in the United States, the SEC, under the Biden administration, recently instructed SEC-listed entities to provide details about their sustainable efforts and respect for human rights. Eager to enact such disclosure legislation, the House passed legislation in June 2021 to disclose such efforts of an SEC-listed company and how they relate to the company’s long-term objectives.

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