The NCTO along with the Coalition for a Prosperous America and Alliance for American Manufacturing have issued statements in support of the House China Select Committee’s leaders calling on the US DHS to crack down on unfair trade practices that are said to be facilitating the importation of products made with forced labour.
NCTO president and CEO Kim Glas argued on behalf of the NCTO that: “Chinese cotton from Xinjiang is flooding the global marketplace, making its way to our doorsteps and into our closets. As a result, we need a comprehensive and aggressive solution from the administration to confront these practices head on.”
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She is keen for the administration and DHS secretary Alejandro Mayorkas to step up enforcement of UFLPA, fraudulent origin claims and what she described as “the gaping de minimis loophole that is facilitating millions of illegal and dangerous products a day to our market”.
Glas fears that without an immediate government solution, the strategic supply chain that produces PPE and 8,000 different products for the US military will continue to shut factories and lay off workers.
She added: “We cannot continue to reward China for egregious trade practices at the expense of American and regional manufacturers and workers. If these steps are not taken immediately, we will fail to stop forced labour trade from entering our market and further jeopardise our vital domestic and Western Hemisphere supply chains.”
NCTO explained the concerns and steps outlined by House China Select Committee chairman Mike Gallagher and ranking member Raja Krishnamoorthi are “critically important” and stated: “The administration and DHS must step up enforcement of UFLPA, fraudulent origin claims and the gaping de minimis loophole that is facilitating millions of illegal and dangerous products a day to our market.”
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By GlobalDataFactors undermining UFLPA enforcement in the US
The House China Select Committee representatives said in a letter to the DHS there are several factors undermining the enforcement of the UFLPA.
The first is that companies transfer forced labourers from the XUAR to other
regions in the People’s Republic of China (PRC), complicating DHS enforcement of the presumptive ban on forced labour products from the XUAR. Thus, there is an urgent need to expand the UFLPA Entity List to include companies and entities located outside the XUAR because of the affiliation to companies and entities in the region.
The representatives also noted concerns following reports that PRC companies that have participated in government-sponsored labour transfer programmes have not yet been added to the UFLPA Entity List.
A second factor cited in the letter as undermining the enforcement of the UFLPA is Beijing’s increased transshipment of forced labour products to the US through third countries, including US free trade agreement (FTA) partners. According to the US Customs and Border Protection’s UFLPA Dashboard, other Asian countries now outpace the PRC for the most detained shipments by value.
The committee members added that Vietnam, among many other countries, extensively sources cotton, yarn, and fabric from the PRC – where 90% of cotton originates in the XUAR to produce finished textile goods for export to the US.
The letter reads: “According to the US International Trade Commission, these third-country exporters are likely a significant channel through which Xinjiang-origin cotton enters the United States.”
How to improve UFLPA’s enforcement
The representatives urged DHS to add companies outside the PRC that profit from the use of Uyghur forced labour to the UFLPA Entity List. This includes exponentially increasing testing of goods at ports of entry for UFLPA violations, including by expanding the use of isotopic and other testing; and better publicising CBP’s enforcement activities to deter would-be violators.
The letter explained: “CBP should also increase its on-site inspections of production sites in CAFTA-DR [Dominican Republic-Central America] and USMCA [United States of America, Mexico, and Canada] countries to conduct rule of origin verification investigations, which have plummeted in recent years despite a massive influx of yarns and fabrics from the PRC into the region.
“In addition, DHS should significantly enhance its collaboration with federal agencies that have a level of responsibility and additional resources that could be helpful in your enforcement activities. For example, the Department of Commerce and the Office of the US Trade Representative could assist in identifying suspicious global trade patterns involving the PRC to help target countries that are potentially serving as transshipment points and to identify specific products potentially made with forced labour.”
The representatives also suggested DHS expanding its collaboration with the Department of Justice’s (DOJ) “Trade Fraud Task Force,” which is responsible for prosecuting and assessing penalties against violators of US trade statues, including UFLPA.
The representatives pointed out that DOJ has limited the authority of and woefully under-resourced this task force, which is responsible for prosecuting cases across the estimated $163bn-$327bn a year that international trade crime (i.e. lack of rule of origin compliance, illegal importation of banned good, etc.) costs the United States.
The letter also urged the DHS to appoint a top-level political official with the mandate to lead and coordinate its UFLPA enforcement efforts and requested DHS’s written assessment of the potential effect on UFLPA enforcement efforts of altering de minimis eligibility for textile and apparel and other high-risk items,
including determining whether exceptions to de minimis treatment are warranted for certain high-risk items to prevent unlawful importations.
The House China Select Committee’s leaders’ letter to DHS secretary Alejandro Mayorkas ended with 21 questions and a request for a written response to be provided for each one before 1 March 2024. The questions include whether or not 29 companies have been involved in using Uyghur forced labour and whether they meet the criteria for being placed on the UFLPA Entity List.
