How Uyghur Forced Labor Prevention Act Will Affect U.S. and China

Tuesday marked the 180-day implementation deadline for the Uyghur Forced Labor Prevention Act (UFLPA), potentially far-reaching legislation that bans products linked to coerced labor from China.

Signed into law by President Joe Biden on December 23 last year, the UFLPA represents the U.S. government's most significant response to what it has determined are policies amounting to "genocide" and "crimes against humanity" in Xinjiang region of northwest China.

A State Department report in April said more than a million Uyghurs and other mainly Muslim ethnic minorities had been arbitrarily detained in Xinjiang since 2017 and subjected to ongoing "reeducation" in detention centers, as well as suppression of religious practice, coerced abortions and state-sponsored forced labor.

The Chinese government, which has justified the measures as part of a years-long counter-terrorism campaign, denies any violation of human rights. Beijing says its policies have not only been effective at de-radicalizing the Muslim population in Xinjiang, but also have left the region happier than at any time in its existence.

Joe Biden and Xi Jinping
In this combination image, Joe Biden addresses the Major Economies Forum on Energy and Climate from the South Court Auditorium of the Eisenhower Executive Office Building, next to the White House, in Washington, DC on June 17, 2022 and Chinese President Xi Jinping at a ceremony to honour contributions to the Beijing 2022 Getty

Since 2020, Washington and Beijing have traded words on the matter and swapped rounds of sanctions. From June 21 onward, however, the U.S. is transferring some of the burden onto the business community, which rights groups see as having benefited disproportionately from Uyghur suffering—and kept American consumers in the dark about the source of their favorite products.

The UFLPA puts the onus heavily on manufacturers and importers to ensure their supply chains are free of forced labor. Products must come with adequate documentation, including transparent details about their supply chains, or be presumed tainted.

The enactment of the law will upended existing business links between the two countries, but its impact will also be felt by foreign companies with major imports from China and exports to the U.S.

Last week, lengthy guidance released by U.S. Customs and Border Protection (CBP) said importers must provide "clear and convincing evidence" that products made wholly or in part in Xinjiang were not produced using forced labor. The CBP encourages suppliers to check sources from outside China, too, although it was unclear how strictly those would be inspected.

Observers believe the legislation will add new problems for American businesses continuing to operate in China. The fashion industry in particular is expected to experience some upheaval given China's near 20 percent skate in the world's cotton supply—over 80 percent of which is produced in Xinjiang.

A report on Monday by Hong Kong's South China Morning Post found the UFLPA had already caused major disruptions in Xinjiang before its implementation. Xinjiang cotton—once the world's most expensive—was plummeting in value as buyers wary of regulatory penalties go in search of alternative sources.

The result, it would seem, is an urgent need for Beijing to intervene and help the region's cotton producers find new markets.

While the medium- and long-term impact of the UFLPA remains unclear, analysts aren't taking for granted that the law will have its desired effective of ultimately changing Chinese government policy, especially given the scope of American business reliance on China, including Xinjiang.

The Department of Homeland Security's Forced Labor Enforcement Task Force lists cotton among its "high priority sectors for enforcement," but the category also includes tomatoes and polysilicon, a chemical compound used in the production of solar panels. Xinjiang has a 25 percent and 40 percent share, respectively, in the global market for the two products.

U.S. trade with the region, which was worth over $300 million in both imports and exports in 2020, remains among the top 10 in the world. Reports that have implicated some of the largest American firms from Apple to Amazon only demonstrate the difficulties of extricating Xinjiang from existing supply chains, a process that could take years.

America's dependency on Xinjiang don't stop there. A May report by nonprofit data analysts C4ADS showed risk exposure in everything from walnuts to wind turbines.

Earlier this month, German scholar Adrian Zenz wrote in the Jamestown Foundation's China Brief that coerced forms of labor remain "pervasive and large-scale" in Xinjiang. Beijing sanctioned Zenz over his work in 2021.

The complexity and opaque nature of supply chains in China means many importers who rely on third-party auditors in the country may find it impossible to comply with the provisions of the UFLPA. Ultimately, an easier solution might be a costly reallocation of financial resources to avoid punishment by the CBP.

That was precisely the recommendation of Human Rights Watch (HRW), which called on Monday for the U.S. government to "vigorously enforce" the new law.

Uyghur Forced Labor Law Comes Into Effect
A tractor sows cotton seed in Xinjiang, China on April 26, 2021. Tuesday marked the 180-day implementation deadline for the Uyghur Forced Labor Prevention Act, legislation that bans products linked to coerced labor in China. TPG/Getty Images

"The new U.S. law means it's no longer business as usual for companies profiting from forced labor in China, and Xinjiang especially," HRW researcher Jim Wormington said on the group's website. "Companies should swiftly identify any supply chain links to Xinjiang and exit the region or risk violating U.S. law and seeing their goods detained at the U.S. border."

"Companies will be watching closely to see how robustly the U.S. government enforces the new forced labor law. It's vital for U.S. Customs to send a message to businesses, China, and the American public that the U.S. government will not ignore forced labor and crimes against humanity against the Uyghur people," Wormington said.

Chinese officials, who have protested the bipartisan act since its inception last year, have slammed the law claiming it goes against free-market principles. So far, however, there's been no indication that China plans to take any action through the World Trade Organization.

Beijing argues the move will harm U.S. businesses, too. However, just as the West has curtailed Russian energy imports, Washington appears willing to risk the hit. In any case, it's certain to further inflame already strained U.S.-China relations.

Hua Chunying, a spokesperson for the Chinese Foreign Ministry, tweeted Tuesday: "What is there to 'prevent' when 'forced labor' is nonexistent in Xinjiang?

"US Uyghur Forced Labor Prevention Act is built on lies and designed to go after Xinjiang's strong economic sectors such as agriculture & solar industry to impoverish and destabilize the region," Hua said.