U.S. importers brace for chaos as Uyghur Act looms

By Phelm Kine

16.06.2022

Supporters of the East Turkistan National Awakening Movement rally in front of the British Embassy on April 16, 2021 in Washington, D.C. | Drew Angerer/Getty Images


Hi, China Watchers. This week we probe U.S. importer panic about the impending implementation of the Uyghur Forced Labor Prevention Act, check in on the Covid-19 Wuhan lab leak theory and study the career path of Chinese President Xi Jinping’s preferred propagandist. We’ll also spotlight the memoir of a China tech industry whistleblower, who warns that U.S. companies doing business with Chinese firms increasingly face a choice between profit and patriotism.


Scroll down for the results of last week’s favorite China movie survey. And heads up that I’ll be on holiday but we’ve lined up some exciting guest hosts for the coming weeks — stay tuned!


Let’s get to it. — Phelim


American importers are fearing the worst as a law to tackle forced labor in China takes effect next week.


After President JOE BIDEN signed the Uyghur Forced Labor Prevention Act in December, a clock started ticking.


The U.S. government’s Forced Labor Enforcement Task Force, in consultation with the director of National Intelligence and the Department of Commerce, had 180 days to publish a plan for the law’s enforcement.


Trade groups warn that the task force has run out the clock and that key government agencies — Customs and Border Protection and the Department of Homeland Security — have failed to provide timely and adequate guidance to ensure that importers follow the law.

The lack of enforcement clarity — the law requires importers to prove that no element of their product was produced through forced labor — worsens the risk of supply chain disruptions from U.S. seizure of imports.


“Our members are uncertain of what's acceptable proof to overcome that assumption of forced labor. … We're not really getting answers [to] a lot of those questions and what we're hearing is ‘you just have to wait,’’’ said EUGENE LANEY, president of the American Association of Exporters and Importers, a Washington, D.C.-based lobby group. “Our fear is that you're going to start seeing goods held at the border … only because we haven't been provided with informed guidance.”


The Uyghur Forced Labor Prevention Act aims to insulate U.S. companies and consumers from complicity in forced labor practices in Xinjiang. The U.S. government has concluded that forced labor is systemic in the western Chinese province — one of many state policies targeting Uyghurs that constitute genocide. A report released Tuesday by Sheffield Hallam University documented the use of forced labor in Xinjiang’s polyvinyl chloride production chain.


Chinese Foreign Ministry spokesperson WANG WENBIN on Wednesday dismissed Xinjiang forced labor allegations as “a big lie made by anti-China forces.”


Customs Catch-22. CBP published an operations guide on Monday specifying how businesses can prove that their products are untainted by forced labor in Xinjiang. Those documents include purchase orders, supply chain maps and “[a]ffidavits from each company or entity involved in the production process.”


The guidance provides specific details for three categories of imports closely associated with Xinjiang: cotton, tomatoes and polysilicon, a key component in solar panels.

U.S. importers say the CBP guidance is inadequate.


“[The guidance] still leaves many unanswered questions,” CRAIG ALLEN, president of the U.S.-China Business Council, said in a statement. “We are expecting 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.”


The Department of Homeland Security, which supervises CBP operations, pushed back on suggestions that DHS and CBP had neglected to provide importers necessary information to prepare for the law’s implementation, pointing to a Xinjiang Supply China Business Advisory issued in July 2020 and an updated version of that notification published in July 2021.


“CBP is executing a robust engagement plan to ensure importers, stakeholders, and other interested parties have the information they need to comply with the Act,” a DHS spokesperson said in a statement. “U.S. businesses and importers have been made aware of forced labor and other concerns in the Xinjiang Uyghur Autonomous Region (Xinjiang) and elsewhere in China for some time.”


Meanwhile, the Chinese government is warning about the law’s potential negative impacts. “If implemented, the [law] will seriously disrupt normal cooperation between Chinese and American businesses, undermine the stability of global supply chains, and eventually hurt the US own interests,” LIU PENGYU, spokesperson for the Chinese embassy in Washington, D.C., told China Watcher in a statement.


Importers are crying foul at CBP’s requirement that importers comply with “specific importer guidance” imposed by the Forced Labor task force. The problem? The task force won’t publish that guidance until Tuesday, the day the law takes effect.


“Business wants something where if they check the box, comply with all the due diligence required, don’t use any company listed on the Entity List, that they're clean and they're not going to have their shipments blocked,” said JOHN RICHMOND, former U.S. ambassador-at-large for anti-trafficking and partner at Dentons US LLP. “I think that DHS is reading the law as an enforcement action more like the Foreign Corrupt Practices Act … where it's your job not to violate the law and if you violate the law and you're found out, then you'll be held accountable.”


Bipartisan skepticism. Companies concerned about how the law’s implementation may affect them are getting no sympathy on Capitol Hill. Lawmakers say CBP has provided multiple webinars and has sent letters to U.S. importers with a history of sourcing from “locations or entities” linked to Xinjiang forced labor. It also has directed them to begin “supply chain management measures.”


“Businesses knew this day would come eventually, no matter how much they lobbied to delay and weaken the new law,” said Sen. MARCO RUBIO (R-Fla.), who sponsored the bill in the Senate. “There is no excuse for being complicit in the Chinese Communist Party’s genocide.”


A similar sentiment is echoed in the House. “I don't have a lot of sympathy for some of these businesses who say, ‘We don't know what's coming down the road.’ I mean, really? Where have you been?” said Rep. JIM MCGOVERN (D-Mass.), the House sponsor.


Importers say that CBP outreach to businesses linked to previous Xinjiang imports has been more confusing than clarifying. “Some of the [CBP] letters were sent without any sort of background on exactly when and exactly how they found forced labor in the supply chain,” Laney said.


Chaos looms. There are concerns that CBP lacks the capacity to adequately enforce the law, and that it will need to deploy additional personnel and resources to vet imports from China for elements linked to forced labor.


“Most doubt that CBP can implement these requirements effectively, as they are already overwhelmed and understaffed,” said a Shanghai-based supply chain expert unauthorized by his company to speak on the record. “Will CBP be employing DNA testing facilities to ensure that no Xinjiang cotton is used? How can CBP truly know the extent of supply chains and if they are connected to Xinjiang when many companies do not?”


McGovern and Sen. JEFF MERKLEY (D-Ore.) last month sent a letter to the Homeland Security subcommittees of the House and Senate Appropriations Committee urging them to approve $70 million for CBP “to add enforcement personnel, technological capability, training, and other activities necessary to faithfully implement the law.” The subcommittees have not yet responded to the request.


Press pause, please. Importer representatives want a delay in the law’s launch and a rethink of its rollout.


“We’re advocating for Congress … to look at the law and try to determine whether they may need to make some tweaks around informed compliance, tweaks around what is acceptable for evidence and to put more pressure on the regulatory agencies to give us more bi-directional information and engagement,” said Laney. “We definitely need that kind of pushback from regulatory agencies to just say this could be very disruptive at the border and there's a better way for us to do that, but I don't get the sense that that's going to happen.”


TRANSLATING WASHINGTON


— LAWMAKERS FRET CHINESE MILITARY CAPABILITY ‘BLINDSPOTS’: The U.S. failure to correctly predict how the Russian and Ukrainian militaries would perform in the early stages of their ongoing war is fueling fears in Washington of major blindspots in official assessments of China’s military capabilities, POLITICO’s NAHAL TOOSI and LARA SELIGMAN reported Wednesday.


The concerns are rising as American spy agencies reexamine how they assess foreign militaries, and, according to a Biden administration official, are a key driver of a number of ongoing classified reviews. U.S. lawmakers are among those who’ve requested the intelligence reviews, and some have concerns about China in particular.


— AUSTIN DENOUNCES CHINA’S TAIWAN MOVES: Defense Secretary LLOYD AUSTIN vowed to beef up Taiwan’s self-defense capabilities amid an increase in “provocative and destabilizing” moves by Beijing, POLITICO’s STUART LAU reported Friday. “That includes assisting Taiwan and maintaining a sufficient self-defense capability,” Austin said at the Shangri-La Dialogue, a major forum on Asian security. His comments followed the State Department’s approval last week of a $120 million sale of military ship parts to the self-governing island.


Austin’s Chinese counterpart Gen. WEI FENGHE responded on Sunday by warning that Chinese forces “will fight at all cost” to defend its claim to Taiwan. Between the fiery speeches, the two had a bilateral meeting at which Austin urged greater People’s Liberation Army participation “in crisis communications and crisis management systems.” Chinese Foreign Ministry spokesperson WANG WENBIN on Monday put some teeth into Wei’s rhetoric by confirming Bloomberg reporting that China considers the entire Taiwan Strait to be under Beijing’s jurisdiction.


“The Taiwan Strait is an international waterway,” State Department spokesperson NED PRICEresponded Tuesday.


— LAWMAKERS PUSH COMPROMISE CHINA INVESTMENT SCREENING: A bipartisan set of House and Senate lawmakers is proposing a new compromise for government screening of American investments in China as part of a pending economic competitiveness bill aimed at confronting Beijing, POLITICO’s GAVIN BADE reported Monday.


The discussion draft would set up a new federal oversight panel with the authority to review and potentially deny new American investments in China or other adversarial nations over national security concerns, according to text of the draft reviewed by POLITICO and first reported by The Wall Street Journal. The Chinese Foreign Ministry’s Wang said Tuesday that the initiative used “national security as a catch-all pretext to ramp up unjustified investment review.”


Source: politico.com