The region at the heart of solar production is rife with forced labor and it is not clear that there is a meaningful supply anywhere else of the materials the solar industry relies on. Further, it is not clear how solar suppliers, importers, developers, or investors can verify that their supply chains are free of forced labor when the Chinese government denies that such practices exist and may punish those who would contradict that position.

Add to that issue the fact that Customs is stopping equipment at the border if the agency suspects there is forced labor in the supply chain, but the U.S. Government has not provided meaningful guidance on how to prove that solar products are free of forced labor and therefor admissible.

The industry and regulators are searching for a viable way to source clean supply chains for clean energy and to verify with some certainty that solar equipment in the United States if free of forced labor.

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Hoshine Silica Industry Co. is a major supplier to the solar industry and is more or less ground zero for forced labor abuses.  The solar industry relies on panels made from silicon. Hoshine is the world’s largest metallurgical-grade silicon producer.

Silicon can be made a number of ways, but the most common steps are to mine quartz, crush and heat that material into metallurgic-grade silicon, then use chemical processing to make polycrystalline silicon. There is obviously more complexity to the system, but the purpose of the explanation above is to point out that a major source for the silica rock, as well as the coal needed for the heat processing, are both found in the mines and manufacturing facilities of Hoshine Silica Industry co. According to reports, those facilities are in the same industrial park as two Uighur internment camps.

The solar industry recognizes the forced labor problem is real, is not going to go away on its own, and must be addressed head on.

2. The Current and Near Future State of Regulation

2.1 U.S. Customs is stopping equipment at the border

As we reported here, the U.S. Government issued a Withhold Release Order (WRO) stating that any products believed to contain silica material produced by Hoshine Silicon Industry Co. and its subsidiaries should be held by Customs and Border Protection (CBP) and not released without evidence that the product’s supply chain was free of forced labor.

It appears that more similar regulation is coming down the pike. We understand that the effort to combat forced labor in the solar industry is being driven by the National Security Council at the White House, and supported by an unusual coalition of China hawks, Labor interests, and NGOs. For that we reason, we believe that there the current administration will pursue more WROs.

Additionally, on June 24, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) added four Chinese entities to the Entity List for accepting or utilizing forced labor in the implementation of China’s campaign of repression against Muslim minority groups in the Xinjiang Uighur Autonomous Region (XUAR). It is very possible those companies may soon be subject to WROs:

• Xinjiang Daqo New Energy Co., Ltd.
• Xinjiang East Hope Nonferrous Metals Co., Ltd.
• Xinjiang GCL New Energy Material Technology Co., Ltd.
• Xinjiang Production and Construction Corps (XPCC)

According to recent reports, BIS may also issue more entity list designations. Those designations prohibit exports to the designated companies. However, they may be a good indicator of what companies may be targeted for WROs thereafter.

2.2 The U.S. Congress may broaden prohibitions on imports

In parallel, the House and Senate are currently working on two bills, both titled Uyghur Forced Labor Prevention Act. The senate bill has been passed, while the House bill is still in committee. Those bills could establish a presumption that anything produced in the XUAR uses forced labor. That would mean that importers of those articles would then be reqiured rebut that presumption in order to import any goods from the Region into the United States.

2.3 Other agencies may add to the restrictions

There is some speculation that the USTR may start issuing 301 designations – adding a substantial punitive tariff to equipment from the Xinjiang region. Meanwhile, the U.S. Department of Treasury has shown that it is not afraid to use its sanctions authority to entirely cut off U.S. persons from transactions with parties suspected of forced labor abuses.

3. The Opening for Industry: Self-Regulation or Government Regulation

3.1 Customs will need some time to ramp up its enforcement apparatus

The U.S. Customs and Border Patrol agents addressing forced labor are competent and hard-working. However, the agency is understaffed to deal with the overwhelming problem of forced labor in the solar industry. With maybe a couple dozen agents assigned to forced labor, and that force also looking at Xinjiang textile and agriculture imports, it will be difficult for CBP to find bandwidth to clear imports stopped at the border for forced labor issues.

That small group of enforcement officials will face the challenge of tracing supply chains from the base chemical level described above, with documentation in Mandarin. Finally, at this point, there is no clear guidance from the U.S. government as to what evidence would clear a shipment stopped at the border. There is no U.S. Customs checklist for forced labor verification nor a list of acceptable evidence that a supply chain is free of forced labor.

Because no guidance on what constitutes admissible product has been issued, it is unclear what CBP would want to see in order to clear equipment held under a WRO. This uncertainty leaves industry with an opportunity to lead before government imposes requirements (more in Section 5 below).

3.2 Industry can have a voice (for now) in what regulation will look like

As the U.S. Government slowly starts to work on figuring out what constitutes admissibility, the Solar Industry has opportunity to lead the process in a number of different ways:

• The Solar Industry could create and propose a list of criteria for admissible products.
• While it is taking steps to identify suppliers accepting or relying on forced labor (on which more in our second article of this series), the Industry could effectively clear a group of suppliers and white-list those in cooperation with the U.S. Government.
• The Industry could take the Better Cotton Initiative as a template and invest in a third-party verification system that would constitute substantive, auditable evidence of a supply chain free of forced labor.
• We understand that chemical signatures in the silicon wafer from the silicon rock processing would allow for batch tracing,[1] which allowing the Industry or a vendor to the industry to batch-test and identify the source of the materials rely on.

Any one or a combination of the above approaches could help the Industry support the laudable goal of eliminating forced labor from the supply chain while, at the same time, helping the Industry avoid onerous or inconsistent regulations devised without its input. There is opportunity for solar to continue its spectacular growth, but it will need to take steps to address this messy problem.

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Based on the wording of the WRO, we believe it is likely that more and broader import controls on equipment critical to the solar industry may follow.

Separately, the U.S. Department of Commerce, Bureau of Industry and Security has designated Hoshine Silicon Industry (Shanshan) and four other Xinjiang companies to the Entity List. Generally, no person may export or reexport commodities, software, or technology subject to U.S. export controls to companies on the Entity List.

Finally, the U.S. Department o of Labor published a notice that updates its “List of Goods Produced by Child Labor or Forced Labor.” That list now includes polysilicon produced with forced labor in the PRC. Normally, the Department of Labor updates its list every two years. The fact that this updated is the first made outside of that two-year cycle, demonstrates how seriously the Biden administration takes the ongoing human rights abuses against Uyghurs and other minority groups in Xinjiang. It also signals that further restrictions on imports from and trade with the Xinjiang region are likely to follow.

What is a WRO?

CBP can withhold release of imported goods when information “reasonably but not conclusively” indicates that the merchandise was produced using forced labor. Forced labor is defined as “all work or service which is exacted from any person under the menace of any penalty for its nonperformance and for which the worker does not offer himself voluntarily” as well as forced child labor or indentured child labor.

A WRO prevents the goods from entering the United States. Importers have two options: either export the shipments back out of the United States, or submit information showing that the goods were not made with forced labor. If an importer pursues the latter option, it must do so within 3 months of importation and submit a certificate of origin as well as a detailed statement demonstrating that the subject merchandise was not produced with forced labor, e.g., a supply chain audit report.

More Anti-Forced Labor Actions to Follow

Bills working their way through the U.S. House and Senate would impose various restrictions related to China’s Xinjiang Uyghur Autonomous Region, including prohibiting certain imports from Xinjiang and imposing sanctions on those responsible for human rights violations there.

The legislation, or further executive actions could prohibit the entry into the United States of goods manufactured or produced in Xinjiang unless CBP (1) determines that the goods were not manufactured by convict labor, forced labor, or indentured labor under penal sanctions; and (2) reports such a determination to Congress and to the public.

Additionally, the legislation could require issuers of securities to file annual or quarterly reports with the Securities Exchange Commission to disclose instances where the issuer knowingly engaged in activities related to Xinjiang such bodog poker review as working with an entity building detention facilities or surveillance systems there. The President would then review those disclosures to determine whether sanctions or criminal charges are warranted.

How the Renewables Industry is Responding

We understand that U.S. renewable energy industry associations are working with foreign suppliers of modules and other silica-based goods. The goal is to identify suppliers that are able to certify that their goods are free of forced labor, and to enable those suppliers to adequately document their processes.

In our view, these efforts are important. One difficulty, though, is that CBP is poorly staffed to respond to forced labor issues on large scales, and the timing of U.S. renewable energy project imports are often tight. So it remains to be seen whether proactive solutions can be established in time, at the right scale, to protect future imports to supply the industry.

Reid Whitten is the Managing Partner of Sheppard Mullin’s London office, practicing in international trade regulations and investigations.

Scott Maberry is an International Trade partner in the Government Contracts, Investigations & International Trade Practice Group in the firm’s Washington, D.C. office. Scott is a founding member of the Sheppard Mullin Organizational Integrity Group.

To read the original commentary from SheppardMullin, please visit here

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Amb. Shea notes that there is an upcoming “dedicated discussion” on trade developments on cotton at the WTO on May 28. His commentary states that

“For next month’s dedicated discussion to have credibility, it must examine the trade impact of the use of forced labor to pick cotton in China’s Xinjiang province. In light of what we have learned about forced-labor practices in Xinjiang, it is inconceivable that the WTO would convene a meeting on cotton and trade and not include these practices as a topic worthy of review. Simply put, ignoring what is happening in Xinjiang would be tantamount to the WTO holding a meeting on global public health and trade without mentioning the Covid-19 pandemic.”

I have in prior posts looked at the issue of forced labor and child labor both broadly and with special focus on cotton. SeeMarch 24, 2021, When human rights violations create trade distortions — the case of China’s treatment of the Uyghurs in Xinjiang, https://currentthoughtsontrade.com/2021/03/24/when-human-rights-violations-create-trade-distortions-the-case-of-chinas-treatment-of-the-uyghurs-in-xinjiang/; January 25, 2021, Child labor and forced labor in cotton production — is there a current WTO mandate to identify and quantify the distortive effects?, https://currentthoughtsontrade.com/2021/01/25/child-labor-and-forced-labor-in-cotton-production-is-there-a-current-wto-mandate-to-identify-and-quantify-the-distortive-effects/; January 24, 2021, Forced labor and child labor – a continued major distortion in international trade for some products, https://currentthoughtsontrade.com/2021/01/24/forced-labor-and-child-labor-a-continued-major-distortion-in-international-trade-for-some-products/.

As Amb. Shea points out, WTO Members should present information relevant to trade in cotton including potential subsidies (such as government provision of labor at little or no compensation (forced labor)). His commentary urges the U.S. to bring forward any information it may have on the cotton industry in Xinjiang. He notes that

“The United States should bring the issue of forced labor in Xinjiang directly to the WTO by placing it on the agenda of the upcoming dedicated discussion on cotton and trade. Whatever information the U.S. government has developed about forced labor in the cotton fields of Xinjiang and its impact on trade should be shared with other WTO members. Doing so would be consistent with President Biden’s trade agenda, which makes combating forced labor a priority. It is also consistent with the views of U.S. Trade Representative Katherine Tai, who said during her confirmation hearing that forced labor is ‘the crudest example of the race to the bottom in global trade.’”

While the Director-General of the WTO has been quoted as indicating that China does not respond well to being singled out, the cotton initiative at the WTO is looking at all trade practices that affect trade in cotton. Labor subsidies for a region that produces 85% of China’s cotton and 20% of the world’s is obviously fair game. See RT, Stop targeting China if you want it to support global trade reforms, WTO head tells world powers, April 26, 2021, https://www.rt.com/news/522151-wto-chief-stop-targeting-china-cooperation/ (“World Trade Organization (WTO) chief Ngozi Okonjo-Iweala has called on countries to stop targeting China if they want cooperation on global reforms, claiming that putting pressure on Beijing will only get ‘resistance.’ * * * Speaking to a conference held by the European Commission, Okonjo-Iweala suggested targeting China only alienates it further. He urged nations to just ‘put the facts on the table,’ claiming Beijing is ‘willing’ to consider proposals when they are presented without ‘negative spillovers.’”).While China challenges the claim that it uses forced labor for cotton or any other products, it makes sense for WTO Members to marshall the information available so that the matter can be considered as part of the semiannual dedicated session.

Amb. Shea’s commentary is a useful note on seeing to what extent the WTO’s existing process can address significant trade distortions of China or any other cotton producer. Hopefully, a robust process will occur next month in Geneva.

Terence Stewart, former Managing Partner, Law Offices of Stewart and Stewart, and author of the blog, bodog poker review|Most Popular_Congressional

To view the original blog post, please click here. 

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In its annual State Department human rights report, released on March 30, the Biden administration declared that China has engaged in “genocide and crimes against humanity,” citing Beijing’s “mass detention” of the Uyghurs, as well as evidence of forced sterilization, rape, torture, and forced labor. A week earlier, on March 22, the Biden administration—in conjunction with the European Union, the United Kingdom, and Canada—imposed economic sanctions on top Chinese officials over the persecution of the Uyghur people. The Trump administration had also strongly denounced China’s repression of the Uyghur people as genocide but addressed it with less publicity than his other sanctions against China over trade and security issues. Trump had publicly sanctioned China for trade and technology offenses and the crackdown on political rights in Hong Kong. Less well known is that he also imposed financial sanctions in July 2020 on a Chinese company and two officials engaged in Xinjiang labor abuses, and the US Customs and Border Protection barred US imports of certain products made in Xinjiang.

On Myanmar, neither the Trump administration nor the Biden administration so far has designated atrocities committed against the Rohingya Muslims as genocide. The Biden State Department has imposed sanctions on military and police officials over their role in the coup but not for the Rohingya genocide (which was tolerated by the de facto head of state, Aung San Suu Kyi, who was ousted in the coup). Previously, Trump also sanctioned Myanmar’s military officers for drug dealing and other criminal activity but not for the Rohingya genocide. Canada, the European Union, and the United Kingdom have also imposed sanctions on Myanmar’s military officials.

Despite their worthy intentions, economic sanctions imposed by the United States to punish genocide or atrocities against civilians have a mixed record. The historical evidence suggests that such sanctions alone are often ineffective unless accompanied by stronger actions, such as US military intervention—for example, against Yugoslavia and the Islamic State of Iraq and the Levant (ISIL). US willingness to take military action against Myanmar or China is inconceivable at present.

Yet mass atrocities cannot be met with indifference from the community of nations, even when the only practical action is undertaken more to send a message and take a stand than to bring about change. The United States has many issues of concern about China’s economic might, from technology theft to the power of its state-owned enterprises. China’s military and political power projections raise legitimate concerns in Washington, but there are also areas where cooperation with Beijing is needed, particularly on climate change. These imperatives have unfortunately forced the plight of the Uyghur people to take a backseat. But they must not be forgotten.

One way to bolster that message is to work with allies to take coordinated steps, as the Biden administration started to do in March with regard to the persecution of the Uyghur people. In addition, the United States can seek a broader response through the United Nations, the International Criminal Court (ICC), and the International Court of Justice (ICJ), both of which sit in The Hague in the Netherlands. Only one country, The Gambia, has brought a case to the ICJ on behalf of all Muslim nations against Myanmar for the massacre of the Rohingya people.

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The term “genocide” has been difficult to define and disputed by various parties in conflicts over many decades, in which massive numbers of civilians on all sides have been killed. The UN General Assembly adopted the UN Convention on the Prevention and Punishment of the Crime of Genocide in 1948, following what universally recognized to have been genocide carried out by the Nazi regime in Germany in World War II. But only a few leading perpetrators have been brought before the ICJ or the ICC.

Prosecutions under the UN Genocide Convention have been few and often delayed, as was the case in the aftermath of the Rwanda civil war in the early 1990s. The trial following the genocide of ethnic Tutsis in the Rwandan civil war in 1994 was not concluded until September 1998 and was the first in which the UN Genocide Convention was enforced. The slaughter bodog online casino of civilians in Darfur in western Sudan in the first decade of this century is the only active genocide-related investigation in the ICC. Former Sudanese president Omar al-Bashir and his associates are awaiting trials in charges of genocide, war crimes, and crimes against humanity. For the first time, in 2007, the ICJ concluded that the massacre of Bosnian Muslims was genocide, ruling that Serbia committed a breach of the UN Genocide Convention in the 1990s.

US sanctions responding to government atrocities

The United States, meanwhile, has an uneven record of recognizing genocide, though it has deplored mass atrocities in Africa, Asia, and the Middle East, often perpetrated in the context of civil wars. For example, the United States imposed financial sanctions on individuals and entities in response to mass killings by the regimes of Prime Minister Pol Pot in Cambodia and President Idi Amin in Uganda in the 1970s, even though the State Department did not recognize the killings as genocide. Since the end of the Cold War, the US State Department has made statements that genocide has occurred regarding at least five distinct situations: Bosnia (1993), Rwanda (1994), Iraq (1995), Darfur (2004), and areas under the control of ISIL (2016 and 2017). The situation in Xinjiang, China, is the latest to be added to this list.

The table records economic sanctions in eight cases officially recognized or discussed by the State Department as genocide. In the remaining seven genocide cases, economic sanctions were imposed to achieve broader humanitarian goals, as noted above, or the atrocities were not discussed or officially designated as genocide. (The sanctions against Iraq’s invasion of Kuwait and its nuclear program between 1990 and 2003 were not specific to the Kurdish genocide, though the State Department officially recognized it as such in 1995.)

Outcomes in genocide cases are scored following our methodology in Economic Sanctions Reconsidered, 3rd edition (Hufbauer et al. 2009). In five cases where sanctions were imposed, the outcome was scored as successful (a score of 9 or higher). Outcomes were scored as less successful in the remaining seven cases where sanctions were imposed (a score of 8 or lower). When sanctions are combined with military measures, the military dimension may be decisive. Successful campaigns against Yugoslavia and ISIL involved significant military action. In six cases, humanitarian goals went alongside US efforts to destabilize the regime or to end the war: President Idi Amin in Uganda, Prime Minister Pol Pot in Cambodia, President Siad Barre in Somalia, President Slobodan Milošević in Serbia, President Omar al-Bashir in Sudan, and ISIL in Iraq. Sanctions against Myanmar also have a regime change goal (Commander-in-Chief Senior General Min Aung Hlaing and his military associates).

As noted earlier, the United States has not to this date sanctioned Myanmar for the Rohingya genocide, but in March President Biden issued an executive order to impose sanctions against 12 military officers, including Senior General Min Aung Hlaing, responsible for the Myanmar military coup.

Unlike other instances of genocide, Chinese repression of the Uyghur minority appears not to entail mass killings but rather “reeducation,” resettlement, and kindred measures to fit the Uyghur people into Chinese cultural norms. Nevertheless, two US Secretaries of State, Mike Pompeo and Antony J. Blinken, have proclaimed human rights abuses against the Uyghur people as genocide. US financial sanctions have been specifically imposed against two Chinese officials and a firm directly responsible for human rights abuses in Xinjiang. Following almost unanimous passage in the US House of Representatives in 2020, the Senate is now considering the Uyghur Forced Labor Prevention Act. The act presumes that goods originating in the Xinjiang Uyghur Autonomous Region are the product of forced labor and bans their importation, unless proven otherwise. Similar restrictions have already been enforced, under existing legislation, by US Customs and Border Protection.

The European Union’s sanctions against the persecution of Uyghur Muslims opened the door for President Biden to work with allies to mount economic and legal pressure on Myanmar and China. Countries in the Association of Southeast Asian Nations (ASEAN) are highly reluctant to punish fellow member Myanmar, and countries worldwide are reluctant to offend China. Hence, the United States should continue to work with Western allies to coordinate economic pressure and consider taking the persecution of the Rohingya and Uyghur people to the International Court of Justice.

To read the original report from the Peterson Institute for International Economics, please click here 

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“As Party Secretary and Political commissar of the XPCC since 2020, Wang Junzheng is involved in overseeing all policies implemented by the XPCC. In this position, he is responsible for serious human rights violations in China, in particular large-scale arbitrary detentions and degrading treatment inflicted upon Uyghurs and people from other Muslim ethnic minorities, as well as systematic violations of their freedom of religion or belief, linked, inter alia, to the XPCC’s implementation of a large-scale surveillance, detention and indoctrination programme targeting Uyghurs and people from other Muslim ethnic minorities.

“He is also responsible for the XPCC’s systematic use of Uyghurs and people from other Muslim ethnic minorities as a forced workforce, in particular in cotton fields. As Deputy Secretary of the Party Committee of the XUAR since 2020, Wang Junzheng is involved in overseeing all the security policies implemented in Xinjiang, including the aforementioned programme targeting Uyghurs and people from other Muslim ethnic minorities. As Secretary of the Political and Legal Affairs Committee of the XUAR (February 2019 to September 2020), Wang Junzheng was responsible for maintaining internal security and law enforcement in the XUAR. As such, he held a key political position in charge of overseeing and implementing the aforementioned programme.”

On the same day, the United States, United Kingdom and Canada issued a joint statement announcing sanctions on individuals and/or an entity in China involved with the alleged human rights abuses of Uyghurs in Xinjiang. See U.S. Department of State press release, Joint Statement on Xinjiang, March 22, 2021, https://www.state.gov/joint-statement-on-xinjiang/. The body of the joint message is copied below.

“We, the Foreign Ministers of Canada and the United Kingdom, and the United States Secretary of State, are united in our deep and ongoing concern regarding China’s human rights violations and abuses in Xinjiang. The evidence, including from the Chinese Government’s own documents, satellite imagery, and eyewitness testimony is overwhelming. China’s extensive program of repression includes severe restrictions on religious freedoms, the use of forced labour, mass detention in internment camps, forced sterilisations, and the concerted destruction of Uyghur heritage.

“Today, we have taken coordinated action on measures, in parallel to measures by the European Union, that send a clear message about the human rights violations and abuses in Xinjiang. We are united in calling for China to end its repressive practices against Uyghur Muslims and members of other ethnic and religious minority groups in Xinjiang, and to release those arbitrarily detained.

“We underline the importance of transparency and accountability and call on China to grant the international community, including independent investigators from the United Nations, journalists, and foreign diplomats, unhindered access to Xinjiang.

“We will continue to stand together to shine a spotlight on China’s human rights violations. We stand united and call for justice for those suffering in Xinjiang.”

Australia and New Zealand, while not imposing sanctions themselves, added their voices of concern over the alleged human rights abuses in Xinjiang of the Uyghurs. See Minister of Foreign Affairs Australia, Joint statement on Human Rights Abuses in Xinjiang, 23 March 2021, https://www.foreignminister.gov.au/minister/marise-payne/media-release/joint-statement-human-rights-abuses-xinjiang. The Joint Statement is copied below.

bodog sportsbook review “The Australian and New Zealand Governments today reiterate their grave concerns about the growing number of credible reports of severe human rights abuses against ethnic Uighurs and other Muslim minorities in Xinjiang.

“In particular, there is clear evidence of severe human rights abuses that include restrictions on freedom of religion, mass surveillance, large-scale extra-judicial detentions, as well as forced labour and forced birth control, including sterilisation.

“Australia and New Zealand welcome the measures announced overnight by Canada, the European Union, the United Kingdom and the United States. We share these countries’ deep concerns, which are held across the Australian and New Zealand communities.

“Since 2018, when reports began to emerge about the detention camps in Xinjiang, Australia and New Zealand have consistently called on China in the United Nations to respect the human rights of the Uighur people, and other religious and ethnic minorities.

“Today, we underscore the importance of transparency and accountability, and reiterate our call on China to grant meaningful and unfettered access to Xinjiang for United Nations experts, and other independent observers.”

While China argues that their treatment of the Uyghurs is an internal matter, the allegations of serious human rights abuses have raised widespread international condemnation and increasing use of sanctions. The sanctions, however, typically are limited to freezing assets (if any) of individuals or entities in the sanctioning country, banning travel to the country imposing the sanctioning, etc.

Trade Implications

While allegations of human rights violations do not necessarily carry trade distortion implications, the case of the forced labor of Uighurs in Xinjiang clearly does. Xinjiang produces some 80% of the cotton grown in China, much of it produced by forced labor according to reports. As China is a major producer of textile and apparel products and a major exporter of the same, the distortions in trade flows should be obvious. Foreign cotton will have trouble competing in China with cotton produced with forced labor. Garment producers who don’t use the Chinese cotton will face distortions as competing against garments where a significant input has been obtained at artificially low prices. Some countries (e.g., the United States and Canada) have laws which permit them to prevent imports of products made with forced labor, although the breadth of the actions taken to date are typically quite limited.

In prior posts, I looked at the large number of products produced around the world with forced labor or with child labor and also looked specifically at the Chinese treatment of the Uyghurs reviewing a number of publications and reports. See Child labor and forced labor in cotton production — is there a current WTO mandate to identify and quantify the distortive effects?, January 25, 2021, ttps://currentthoughtsontrade.com/2021/01/25/child-labor-and-forced-labor-in-cotton-production-is-there-a-current-wto-mandate-to-identify-and-quantify-the-distortive-effects/ ; Forced labor and child labor — a continued major distortion in international trade for some products, January 24, 2021, https://currentthoughtsontrade.com/2021/01/24/forced-labor-and-child-labor-a-continued-major-distortion-in-international-trade-for-some-products/.

To ramp up pressure on China to reform its treatment of the Uyghurs, the United States, European Union, United Kingdom, Canada, Australia, New Zealand and all other countries concerned about the human rights should coordinate a broad-based denial of imports from China or from other countries where cotton from Xinjiang is part of the product until such time as the treatment of the Uyghurs has been corrected.

To read the original blog post from Terrence Stewart’s Current Thoughts On Trade, please click here

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The ILO webpage on forced labor reflects the global nature of the problem. The webpage states in part,

“Although forced labour is universally condemned, ILO estimates show that 24.9 million people around the world are still subjected toit. Of the total number of victims of forced labour, 20.8 million (83 per cent) are exploited in the private economy, by individuals or enterprises, and the remaining 4.1 million (17 per cent) are in State-imposed forms of forced labour. Among those exploited by private individuals or enterprises, 8 million (29 per cent) are victims of forced sexual exploitation and 12 million (64 per cent) of forced labour exploitation. Forced labour in the private economy generates some US$ 150 billion in illegal profits every year: two thirds of the estimated total (or US$ 99 billion) comes from commercial sexual exploitation, while another US$ 51 billion is a result from forced economic exploitation in domestic work, agriculture and other economic activities (Note 1).

“Vestiges of slavery are still found in some parts of Africa, while forced labour in the form of coercive recruitment is present in many countries of Latin America, in certain areas of the Caribbean and in other parts of the world. In numerous countries, domestic workers are trapped in situations of forced labour, and in many cases they are restrained from leaving the employers’ home through threats or violence. Bonded labour persists in South Asia, where millions of men, women and children are tied to their work through a vicious circle of debt. In Europe and North America, a considerable number of women and children are victims of traffickers, who sell them to networks of forced prostitution or clandestine sweat-shops. Finally, forced labour is still used as a punishment for expressing political views.

“For many governments around the world, the elimination of forced labour remains an important challenge in the 21st century. Not only is forced labour a serious violation of a fundamental human right, it is a leading cause of poverty and a hindrance to economic development. ILO standards on forced labour, associated with well-targeted technical assistance, are the main tools at the international level to combat this scourge.”

ILO, International Labour Standards on Forced labour, https://www.ilo.org/global/standards/subjects-covered-by-international-labour-standards/forced-labour/lang–en/index.htm. See also ILO and Walk Free, 2017, Global Estimates of Modern Slavery, Forced Labor and Forced Marriage.

Child labor involves more people – an estimated 152 million of which 73 million are involved in hazardous work. See ILO, International Programme on the Elimination of Child Labour and Forced Labour (IPEC+), https://www.ilo.org/global/about-the-ilo/how-the-ilo-works/flagships/ipec-plus/lang–en/index.htm.

While the incidence of forced labor and child labor is declining, the COVID-19 pandemic has complicated trends as these populations are most vulnerable. See, e.g., ILO, The International Labour Organization and the US Department of Labor partnership to eliminate child labour and forced labour, 2019, (“The ILO’s most recent global estimates of child labour indicate, however, that significant progress is being made. From 2000 to 2016, there was a net reduction of 94 million children in child labour and the number of children in hazardous work was halved. In parallel, the ILO Worst Forms of Child Labour Convention (No. 182) was ratified by 186 countries, reaching almost universal ratification.

The challenges ahead, however, remain formidable: in 2016, 152 million girls and boys were in child labour and 25 million men, women and children were trapped in forced labour.”); ILO, COVID-19 impact on child labour and forced labour: The response of the IPEC+ Flagship Programme, 2020, (“COVID-19 has plunged the world into a crisis of unprecedented scope and scale. Undoubtedly, restoring global health remains the first priority, but the strict measures required are resulting in massive economic and social shocks. As lockdown, quarantine, physical distancing and other isolation measures to suppress transmission continue, the global economy has plunged into a recession. The harmful effects of this pandemic will not be distributed equally. They are expected to be most damaging in the poorest countries and in the poorest neighbourhoods, and for those in already disadvantaged or vulnerable situations, such as children in child labour and victims of forced labour and human trafficking, particularly women and girls.

These vulnerable groups are more affected by income shocks due to the lack of access to social protection, including health insurance and unemployment benefits. Experience from previous crisis situations, such as the 2014 Ebola epidemic, has shown that these factors play a particularly strong role in exacerbating the risk to child labour and forced labour.”).

In China, the government’s efforts to “reeducate” minority populations (e.g., Uyghurs from the western region of Xinjiang) has led to allegations of forced labor on a range of products and actions by the United States to restrict certain imports from China from the region. The Washington International Trade Association is holding a virtual webinar on January 27 looking at the challenges in China and the forced labor problem of the Xinjiang Uyghur Autonomous Region and the resulting U.S. ban on cotton and tomato products. See WITA, WITA’s Friday Focus on Trade, Vol. 206, January 22, 2021 (containing various articles on the China forced labor issue and referencing the webinar on January 27, WITA Webinar: The U.S. Moves Against Forced Labor in Xinjiang).

The U.S. Department of Labor in September released its 2020 list of products believed to be produced in foreign countries with forced labor or with child labor. See USDOL, 2020 List of Goods Produced by Child Labor or Forced Labor, September 2020. The report provides the following statement of purpose:

“The U.S. Department of Labor (USDOL or the Department) has produced this ninth edition of the List of Goods Produced by Child Labor or Forced Labor in accordance with the Trafficking Victims Protection Reauthorization Act (TVPRA), as amended. The TVPRA requires USDOL’s Bureau of International Labor Affairs (ILAB or the Bureau) to “develop and make available to the public a list of goods from countries that [ILAB] has reason to believe are produced by forced labor or child labor in violation of international standards” (TVPRA List or the List; 22 U.S.C. § 7112(b)(2)(C)). It also requires submission of the TVPRA List to the United States Congress not later than December 1, 2014, and every 2 years thereafter (22 U.S.C. § 7112(b)(3)).

“The Frederick Douglass Trafficking Victims Prevention and Protection Reauthorization Act of 2018 expanded ILAB’s mandate to require the TVPRA List to include, ‘to the extent practicable, goods that are produced with inputs that are produced with forced labor or child labor’” (22 U.S.C. 7112(b)(2)(C)).

“The TVPRA directs ILAB ‘to work with persons who are involved in the production of goods on the list … to create a standard set of practices that will reduce the likelihood that such persons will produce goods using [child labor or forced labor],’ and ‘to consult with other departments and agencies of the United States Government to reduce forced and child labor internationally and ensure that products made by forced labor and child labor in violation of international standards are not imported into the United States’ (22 U.S.C. § 7112(b)(2)(D)bodog casino –(E)).” (pages 1 and 3).

This year’s publication lists 77 countries that have one or more products believed to be produced with child labor, with forced labor or with both child and forced labor. Fourteen countries are listed as having products believed to be produced with forced labor. Thirty-six countries are listed as believed to produce products with child and forced labor. Sixty-four countries produce some products with child labor. The 77 countries are listed below along with whether products are believed produced with child labor, forced labor, or child labor & forced labor.

Afghanistan — child larbor; child labor & forced labor

Angola — child labor & forced labor

Argentina — child labor; child labor & forced labor

Azerbaijan — child labor

Bangladesh – child labor; child labor & forced labor

Belize — child labor

Benin — child labor; child labor & forced labor

Bolivia — child labor; forced labor; child labor & forced labor

Brazil — child labor; forced labor; child labor & forced labor

Burkina Faso — child labor; child labor & forced labor

Burma — child labor; forced labor; child labor & forced labor

Cambodia — child labor; child labor & forced labor

Cameroon — child labor

Central African Republic — child labor

Chad — child labor

China — forced labor; child labor & forced labor

Colombia — child labor; child labor & forced labor

Costa Rica — child labor

Cote d’Ivoire — child labor & forced labor

Democratic Republic of the Congo — child labor; child labor & forced labor

Dominican Republic — child labor; child labor & forced labor

Ecuador — child labor

Egypt — child labor

El Salvador — child labor

Eswatini — child labor

Ethiopia — child labor; child labor & forced labor

Ghana — child labor; child labor & forced labor

Guatemala — child labor

Guinea — child labor

Honduras — child labor

India — child labor; child labor & forced labor

Indonesia — child labor; child labor & forced labor

Iran — child labor

Kazakhstan — child labor & forced labor

Kenya — child labor

Kyrgyz Republic — child labor

Lebanon — child labor

Lesotho — child labor

Liberia — child labor

Madagascar — child labor

Malawi — child labor; child labor & forced labor

Malaysia — forced labor; child labor & forced labor

Mali — child labor; child labor & forced labor

Mauritania — child labor

Mexico — child labor; child labor & forced labor

Mongolia — child labor

Mozambique — child labor

Nepal — child labor & forced labor

Nicaragua — child labor

Niger — child labor; forced labor

Nigeria — child labor; child labor & forced labor

North Korea — forced labor

Pakistan — child labor; forced labor; child labor & forced labor

Panama — child labor

Paraguay — child labor; child labor & forced labor

Peru — child labor; forced labor; child labor & forced labor

Philippines — child labor

Russia — forced labor; child labor & forced labor

Rwanda — child labor

Senegal — child labor

Sierra Leone –child labor; child labor & forced labor

South Sudan — child labor & forced labor

Sudan — child labor

Suriname — child labor

Taiwan — forced labor

Tajikistan — child labor & forced labor

Tanzania — child labor

Thailand — child labor; forced labor; child labor & forced labor

Turkey — child labor

Turkmenistan — child labor & forced labor

Uganda — child labor

Ukraine — child labor

Uzbekistan — forced labor

Venezuela — forced labor

Vietnam — child labor; child labor & forced labor

Yemen — child labor

Zambia — child labor

Zimbabwe — child labor

While the number of products obviously vary by country and category, the report categorized agriculture as having 68 child labor listings and 29 forced labor listings. This compares to manufacturing with 39 child labor and 20 forced labor listings; mining showed 32 child labor and 13 forced labor listings and pornography showed one each.

Looking at specific products for individual countries provides the most information.

As an example, China is shown as having the following products believed to be produced with forced labor — Artificial Flowers, Christmas Decorations, Coal, Fish, Footwear, Garments, Gloves, Hair Products, Nails, Thread/Yarn, and Tomato Products. China is also shown as having the following products believed to be produced with child labor and forced labor — Bricks, Cotton, Electronics, Fireworks, Textiles, and Toys. As a USDOL separate post notes, gloves, hair products, textiles, thread/yarn and tomato products were added in 2020 because of research on the forced labor situation in Xinjiang. See USDOL, Bureau of International Labor Affairs, Against Their Will: The Situation in Xinjiang, Forced Labor in Xinjiang, 2020, https://www.dol.gov/agencies/ilab/against-their-will-the-situation-in-xinjiang. 

Looking at India, products believed to be produced with child labor include the following — Bidis (hand-rolled cigarettes), Brassware, Cotton, Fireworks, Footwear, Gems, Glass Bangles, Incense (agarbatti), Leather Goods/Accessories, Locks, Matches, Mica, Silk Fabric, Silk Thread, Soccer Balls, Sugarcane, Thread/Yarn. Products believed produced with child labor & forced labor include the following — Bricks, Carpets, Cottonseed (hybrid), Embellished Textiles, Garments, Rice, Sandstone, Stones.

While the USDOL reports don’t estimate the portion of exports from any country of individual products that are produced with child and/or forced labor, the trade consequences can be significant as such labor is artificially valued creating distortions in competitiveness and resulting trade flows. For example, the list of products for China are either important export products for China or important inputs into exported products. The same would true for India and for many other of the 77 countries on the list.

Conclusion

The U.S. has in place statutory provisions which permit the exclusion from entry into the United states of products produced with forced labor. The Trump Administration did a somewhat better job enforcing U.S. law on imports of products produced with child or forced labor. Much more can be done and should be done domestically.

Similarly, the ILO is working to eliminate forced labor and child labor consistent with UN Sustainable Development Goals. “The objective of the IPEC+ Global Flagship Programme – in line with Target 8.7 of the 2030 Sustainable Development Agenda, adopted by the United Nations in 2015 – is to provide ILO leadership in global efforts to eradicate all forms of child labour by 2025 and all forms of contemporary slavery and human trafficking by 2030. It also aims to ensure that all people are protected from – and can protect themselves against – these gross human rights violations.” ILO, IPEC+ Global Flagship Programme Implementation, Towards a world free from child labour and forced labour, page 4, 2020, https://respect.international/wp-content/uploads/2020/01/wcms_633435.pdf.

The WTO could play a role in the fight against forced labor and child labor. Such labor practices distort global trade flows in addition to the challenges created for countries engaged in such practices in terms of poverty and human rights abuses. The WTO could gather information from Members on the volume of production and exports of products produced with child and forced labor both as finished products and as inputs into other products. Such an exercise would facilitate an understanding of the extent of global trade represented by such products and help focus attention on trade actions that could be taken to help Members eliminate such harmful practices. While it is unlikely that Members will agree to such a data gathering undertaking, one is surely needed and would add transparency to a source of an important global issue with trade as well as non-trade dimensions.

Terence Stewart, former Managing Partner, Law Offices of Stewart and Stewart, and author of the blog, bodog poker review|Most Popular_Congressional

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Governments often have geopolitical or diplomatic spats without sacrificing unrelated commercial trade flows. But it appears China is breaking such diplomatic norms. In May, Australia called on the World Health Organization to conduct an independent and comprehensive investigation into the origins of the deadly coronavirus. Soon after, China targeted Australia’s top 20 exports with otherwise-unexplained sanctions.

A full-blown trade war with China would be grueling for Australia, costing it 6 percent of GDP, according to one study. But Canberra is undeterred. With nearly 2 million people dead worldwide, understanding how the virus made the leap into human populations could help stave off the next pandemic.

Some of the trade sanctions are in black and white, like duties on Australian barley published in a government report. But there have been murkier actions like unexplained delays at ports. Jeffrey Wilson of Perth USAsia Centre, an Australian think tank, attributes these to quiet instructions from a Chinese Communist Party official to a Chinese importing agency.

It was no surprise when China took affront at the call for a pandemic inquiry, with one senior diplomat saying Australia’s move “hurt the feelings of the Chinese people.” But there is no “hurt feelings” clause in World Trade Organization (WTO) rules, and Australia is turning to international law to fight back.

It recently launched a WTO challenge to China’s 80 percent tariff on its barley exports, and it reportedly has a strong case. Many will watch to see if the United States, Europe or others join Australia as third parties.

Tensions between China and Australia are not new, and matters relating to an encroaching China will not surprise a U.S. audience. For instance, in 2013 Chinese hackers reportedly stole the blueprints of Australia’s new spy headquarters. Australia had to gut the building and restart the half-billion-dollar project. 

In 2017, an Australian senator was heard defending China’s South China Sea policy in ways that directly contradicted his party’s stance. That senator turned out to have received hefty campaign donations from a wealthy Chinese businessman and a subsidiary of a Chinese state-linked company.

Meanwhile, there are ongoing concerns of China silencing free speech on university campuses. With China representing one-third of all foreign enrollments at Australian universities and a major source of research funding, the stakes are high. 

Australia has responded by tightening up domestic laws and removing security vulnerabilities to foreign influence, including passing laws to prohibit foreign interference in elections, a ban on Chinese telecoms from Australia’s 5G network, and an investigation into the links between China and the country’s higher education sector. 

These moves mirror similar actions by the U.S. government: restrictions on the use of Chinese-connected software applications, restricting U.S. investment to finance Chinese Communist Party military companiesand legislation to de-list companies from U.S. exchanges if they cannot establish independence from a foreign government.

But the China-Australia trade clash reveals a worrying trend: Beijing wielding its huge market as a truncheon against something as straightforward as foreign criticism. And if there was any confusion over China’s sensitivities, its embassy in Canberra released a list of 14 grievances, which extend beyond Australia’s call for an independent inquiry into the origins of the pandemic. Beijing’s resentments include government funding for any research or report that is unfriendly or antagonistic towards China, accusing China of cyberattacks, involvement in South China Sea issues, restrictions on foreign interference in elections and restricting China’s investment.

“I’ve never seen anything like it before,” said former Australian Prime Minister Malcolm Turnbull. Australia has no incentive to stoke further tensions, but Prime Minister Scott Morrison’s Liberal–National Coalition is unlikely to back down. 

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CBP’s Office of Trade directed the issuance of a Withhold Release Order (WRO) against cotton products made by the XPCC based on information that reasonably indicates the use of forced labor, including convict labor. The WRO applies to all cotton and cotton products produced by the XPCC and its subordinate and affiliated entities as well as any products that are made in whole or in part with or derived from that cotton, such as apparel, garments, and textiles.

The WRO on XPCC cotton products is the sixth enforcement action that CBP has announced in the past three months against goods made by forced labor from China’s Xinjiang Uyghur Autonomous Region. In July 2020, the U.S. Government issued an advisory to caution businesses about the risks of forced labor in Xinjiang, where the Chinese government continues to execute a campaign of repression targeting the Uyghur people and other ethnic and religious minority groups.

“The human rights abuses taking place at the hands of the Chinese Communist government will not be tolerated by President Trump and the American people,” said DHS Acting Deputy Secretary Ken Cuccinelli.  “DHS is taking the lead to enforce our laws to make sure human rights abusers, including U.S. businesses, are not allowed to manipulate our system in order to profit from slave labor. ‘Made in China’ is not just a country of origin it is a warning label.” 

“China’s systemic abuse of forced labor in the Xinjiang Region should disturb every American business and consumer,” said CBP Acting Commissioner Mark A. Morgan. “Forced labor is a human rights violation that hurts vulnerable workers and introduces unfair competition into global supply chains. CBP will continue taking decisive action to prevent goods made with forced labor from entering the United States.”

Federal statute 19 U.S.C. 1307 prohibits the importation of merchandise mined, manufactured, or produced, wholly or in part, by forced labor, including convict labor, forced child labor, and indentured labor. This WRO will require detention at all U.S. ports of entry of all cotton products produced by the XPCC and any similar products that the XPCC produces. Importers of detained shipments are provided an opportunity to export their shipments or demonstrate that the merchandise was not produced with forced labor.

CBP issued 13 WROs during Fiscal Year 2020, including eight WROs on goods made by forced labor in China. All WROs are publically available and listed by country on the CBP’s Forced Labor Withhold Release Orders and Findings page. The Forced Labor Division, established in 2018 within CBP’s Office of Trade, leads the enforcement of the prohibition on the importation of goods made from forced labor.

CBP receives allegations of forced labor from a variety of sources, including the general public. Any person or organization that has reason to believe merchandise produced with the use of forced labor is being, or likely to be, imported into the United States can report detailed allegations by contacting CBP through the e-Allegations Online Trade Violation Reporting System or by calling 1-800-BE-ALERT. 

To read the original piece from the Department of Homeland Security, please click here

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But since brokering a trade deal with Beijing in January, he has become one of China’s biggest defenders within the administration, emerging as an obstacle to lawmakers and other top White House officials who want to punish China over its treatment of ethnic Muslims and begin trade talks with Taiwan.

Over the past several months, Mr. Lighthizer has pushed back on several proposed policy measures that rankled Beijing, arguing those efforts could disrupt the U.S.-China trade pact that he and President Trump spent more than two years trying to forge, according to several former government officials and other people familiar with the conversations.

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