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Esquel Now on 2 Forced-Labor Blacklists

By Jasmin Malik Chua

July 25, 2022

A worker packages spools of cotton yarn at a textile manufacturing plant, as seen during a government organized trip for foreign journalists, in Aksu in western China's Xinjiang Uyghur Autonomous Region, Tuesday, April 20, 2021.

The world’s largest woven-shirt maker has denounced the inclusion of one of its Chinese subsidiaries on a forced-labor blacklist as “misguided” and “unjust.”

“We morally oppose the use of forced labor, which is completely contrary to our principles and the business practices by which we have operated for more than 40 years,” Esquel Group said last week after Changji Esquel Textile Co. was added to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List.

Changji Esquel Textile Co. operates a spinning mill in China’s Xinjiang Uyghur Autonomous Region, where reports of coerced labor by persecuted Muslim minorities have continued to mount. Esquel’s website also states a “commitment to Xinjiang,” where it has maintained a presence since 1995 and portrays itself as a “member of the local community.”

The Hong Kong apparel giant insists, however, that because it’s able to map its vertically integrated supply chain from “end to end,” it’s able to meet “all international standards” for its products while preventing the sale or export of goods in jurisdictions where they are verboten.

“We have retained independent auditors to audit our facilities, and those audits have verified the integrity of our labor policies and practices across the board,” said Esquel, which has worked with nameplates such as Hugo Boss, Nike, Ralph Lauren and Tommy Hilfiger.

The UFLPA, which went into effect last month, created a rebuttable presumption that bars goods mined, produced or manufactured wholly or in part in Xinjiang or by an entity on the UFLPA Entity List from entering the United States.

This isn’t Esquel’s first experience with being named and shamed.

Changji Esquel Textile Co.’s suspected links to forced Uyghur labor first attracted public attention after the Department of Commerce named it on the Bureau of Industry and Security Entity List in 2020, marking it as complicit in human-rights violations in China and preventing it from purchasing U.S. technology and components without a special dispensation.

The move caused Esquel such “incalculable reputational and economic harm,” including the loss of several major clients, that it sued the federal government. In October, the U.S. District Court for the District of Columbia ruled against the lawsuit, citing a lack of evidence that the Department of Commerce was acting outside its purview. Esquel suffered another blow last week when its appeal was rejected for “coming up short” in its ultra vires claims that the government was operating beyond its legal authority.

Esquel told Sourcing Journal that while it was disappointed by the latest decision, the U.S. government’s victory was “narrow” and only related to the Department of Commerce’s “basic authority” to list Changji Esquel Textile Co. rather than the “factual arguments” of its case.

“Multiple judges throughout this case have questioned the lack of substantiated evidence and the questionable rationale and process for placing Changji Esquel on the Entity List,” it said.

Meanwhile, Esquel said that the ruling has done nothing to “undo the harm” caused to thousands of “innocent workers” worldwide whose “livelihoods have been destroyed” as a result of the U.S. government’s “overreach” following a “single passing reference” to the company in a media article.

“Garment workers and communities across Sri Lanka, Mauritius, and Malaysia have borne the cost of the U.S. government’s shoddy enforcement action, which relied on a convenient trope, paltry evidence, and poor fact-finding,” Esquel said of the “mistaken listing,”​​ which an End-User Review Committee had agreed to conditionally remove last July, only for action to stall.

The firm, which pumped out an annual 100 million shirts at its peak, previously blamed Changji Esquel Textile Co.’s Entity List status for the detention of many of its Vietnamese shipments, jeopardizing its contractual obligations and causing “permanent economic and reputational damages.” When the manufacturer pulled back its presence in Sri Lanka in May, it, too, attributed the drop in customer demand to its tarred reputation.

Esquel said it will continue its efforts to “press the government, present the facts, and remove Changji Esquel from the Entity List.”

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