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Businesses confronting new US ban on Xinjiang products say it leaves them confused

  • The ban, which went into effect in June, requires companies to prove their imports have not involved forced labour

  • A recent shipment of solar modules had been unexpectedly detained at port, an industry investment firm reports

By Laura Brickman

July 12, 2022

Solar panels being installed at a power station in China’s Xinjiang Uygur autonomous region. A US law banning imports from Xinjiang is expected to disrupt the industry, which imports polysilicon from Xinjiang, used to make photovoltaic cells for the panels. Photo: Chinatopix via AP

US companies have fretted for months that a ban on imports from China’s Xinjiang Uygur autonomous region would disrupt business. Now, an early sign suggests they were right to worry.

The Uygur Forced Labour Prevention Act (UFLPA), which went into effect last month, aims to block imports from that region that are alleged to have used forced labour in their production.

Craig Allen, president of the US-China Business Council, said at the time he expected “implementation to be messy”.

“They have released little information beforehand, and companies won’t know many of the details of what they must comply with until the date they must comply,” he said.

A demonstrator during a protest in Istanbul by supporters of the Uygurs. At least one million Uygurs and people from other mostly Muslim groups have been held in camps in Xinjiang, according to rights groups that accuse Chinese authorities of imposing forced labour. Photo: AFP

Since then, industry groups say, the process has only become more confusing, with enforcement a matter of guesswork. The US Customs and Border Protection agency (CPB) does not disclose information on shipments, making it hard to determine how many the ban has already affected.

However, Roth Capital Partners, an investment company involved in the solar industry, recently reported that a large shipment of solar modules containing quartzite from the region had been detained at port – pending documentation of the material’s source.

“We believe this is a major problem for the US solar industry because our checks suggest none of the module vendors have quartzite documentation,” the report, by Roth managing director Philip Shen, said.

The move suggests that CPB is taking a more aggressive approach to enforcement than anticipated and could lead to delays as long as 12 months, Shen noted.

Companies say that CPB is not required to explain why it denies imports, adding to the confusion. CPB did not respond to a request for comment.

The act, which became law on December 21, 2021, gave US agencies, including the Treasury, Labor and State departments, 180 days to establish compliance rules for importers. The ban went into effect on June 21.

In public comments submitted to the agencies, the National Retail Federation called on CPB to avoid detaining imports without proof they were in clear violation of the law, rather than impose blanket restrictions on merchandise sourced from Xinjiang.

Businesses have previously been asked to provide documentation of their supply chain security, but with manufacturers often sourcing materials from within Xinjiang and elsewhere, many such suppliers may be tainted.

Businesses have also voiced frustration at the difficulty of proving a negative: that forced labour was not involved in the products they are importing. They note that Xinjiang’s industries are part of complex supply chains where China controls access and there are few independent monitors.

Analysts also say that without similar legislation in Europe and Canada, US companies will be at a competitive disadvantage. The European Parliament has called for a ban on Xinjiang products made with forced labour, though no action has yet been taken.

The US bill passed both houses of Congress unanimously, with the strong support for it underscoring Washington’s distrust of Beijing. The law accuses Beijing of “widespread state-sponsored forced labour” of Uygurs, Kazakhs, Kyrgyz and other Muslim ethnic minorities.

The ban creates a “rebuttable presumption” that any Xinjiang goods were tainted by the use of forced labour – a “guilty until proven innocent” principle that effectively inverts US customs laws related to forced labour.

Companies can appeal but must provide “clear and convincing” evidence that their supply chains are free of forced labour – a standard that US officials acknowledge is a high bar.

"The idea that importers should have to show that goods are made free of forced labour seems like a rational solution. Sophie Richardson, China director of Human Rights Watch"

The law followed reports that as many as 1 million Uygurs have been detained in camps that Beijing has characterised as employment centres.

Human Rights Watch, which had advocated for the import ban, emphasised the impossibility of due diligence in Xinjiang, because of Chinese government interference and risks posed to workers and trade unions from employers.

“There are already laws on the books in the US that prohibit the import of goods that are problematic,” Sophie Richardson, China director of Human Rights Watch, said on Monday.

“And for a very long time most firms operating in China have done so without the kind of human rights due diligence mandated by the UN Convention on human rights. The idea that importers should have to show that goods are made free of forced labour seems like a rational solution.”

China has vehemently denied accusations of forced labour in Xinjiang, terming these “vicious lies concocted by anti-China forces”, and called the US law a “gross interference in China’s internal affairs”.

“The US needs to immediately stop spreading lies and stop enforcing this malicious legislation,” Foreign Ministry spokesman Zhou Lijian said last week in Beijing.

With a population of approximately 25 million, Xinjiang exports vast quantities of cotton, tomatoes, and polysilicon – a material essential to solar panels – to the US and other countries. Because such Xinjiang products are used by an estimated one million businesses globally, the US law’s impact on supply chains is potentially far-reaching.

Xinjiang produces 45 per cent of the world’s polysilicon. Around 85 per cent of China’s cotton comes from there as well, used by global apparel brands like Gap and Uniqlo. In recent years, it is estimated that the US imported more than 1.5 billion garments annually that use materials manufactured in Xinjiang.

The majority of China’s tomatoes are also grown in Xinjiang and exported to supermarket chains around the world.


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