US bans cotton imports from China producer, citing ‘slave labour’

US blocks cotton made by military-linked firm in China’s Xinjiang province, saying it uses forced labour of Uighur Muslims. China says the US is fabricating news.

Cotton pickers in China's Xinjiang region [File: Stringer/AFP, Getty via Bloomberg]
Eliminating cotton originating in China's Xinjiang province from apparel supply chains could prove difficult [File: Stringer/AFP, Getty Images via Bloomberg]

The administration of United States President Donald Trump raised the economic pressure on China’s western region of Xinjiang, banning cotton imports from a powerful Chinese quasi-military organisation that it says uses the forced labour of detained Uighur Muslims.

The US Customs and Border Protection (CBP) agency said on Wednesday its “Withhold Release Order” would ban cotton and cotton products from the Xinjiang Production and Construction Corps (XPCC), one of China’s largest producers.

The move, which could have a sweeping effect on companies involved in selling textiles and apparel to the US, is among several the Trump administration has been working on in its final weeks to harden the US position against China, making it more difficult for President-elect Joe Biden to ease US-China tensions.

The targeting of XPCC, which produced 30 percent of China’s cotton in 2015, follows a Treasury Department ban in July on all dollar transactions with the sprawling business and paramilitary entity, founded in 1954 to settle China’s far west.

‘Egregious human rights violations’

Department of Homeland Security Secretary Kenneth Cuccinelli, who oversees the border agency, called Made in China a “warning label”.

“The cheap cotton goods you may be buying for family and friends during this season of giving – if coming from China – may have been made by slave labour in some of the most egregious human rights violations existing today in the modern world,” he told a news conference.

Cuccinelli said a region-wide Xinjiang cotton import ban was still being studied.

Watchtowers on a high-security facility near what is believed to be a re-education camp where people from Muslim ethnic minorities are imprisoned on the outskirts of Hotan, in China’s northwestern Xinjiang region [File: Greg Baker/AFP]

The United Nations cites what it says are credible reports that one million Muslims held in camps have been put to work. China denies mistreating Uighurs and says the camps are vocational training centres needed to fight “extremism”.

In a news conference in Beijing, China’s foreign ministry spokeswoman Hua Chunying said US politicians are fabricating news of forced labour in Xinjiang. She added that US practices undermine market principles and would deprive people of jobs.

The XPCC could not immediately be reached for comment, according to the Reuters news agency. The China National Textile and Apparel Council declined to comment and the China Cotton Textile Association could not immediately be reached, Reuters reported.

Broad effects

While the Treasury sanctions target XPCC’s financial structure, Wednesday’s action will force apparel firms and other companies shipping cotton products into the US to eliminate XPCC-produced cotton fibre from many stages of their supply chains, said Brenda Smith, CBP’s executive assistant commissioner for trade.

“That pretty much blocks all Chinese cotton textile imports,” said a China-based cotton trader, who asked not to be identified because of the sensitivity of the issue.

Identifying cotton from a specific supplier will sharply raise manufacturing costs, and only the few large companies with fully integrated operations across the complex textile supply chain could guarantee that no XPCC product has been used, the trader said.

“It really depends on how much proof they want. If they want real proof that this cotton has not been used, that’s going to be extremely difficult,” he added.

Well known clothing brands including Gap Inc, Patagonia Inc and Zara owner Inditex have told the Thomson Reuters Foundation that they did not source from factories in Xinjiang – but that they could not confirm that their supply chains were free of cotton picked from the region.

In September, CBP considered a much broader import ban on all cotton and tomato products from Xinjiang, but after dissent from within the Trump administration, it announced narrower bans on products from specific entities, including two smaller cotton and apparel producers.

Interwoven supply chains

US apparel makers had criticised a broader ban as impossible to enforce, but on Wednesday clothing and retail groups welcomed the XPCC-specific ban. The groups, including the American Apparel and Footwear Association and the National Retail Federation, said in a statement they were on the “front lines of efforts to ensure forced labor does not taint our supply chains or enter the United States”.

A cotton farm on the outskirts of Hami, in China’s Xinjiang province [File: Stringer/Reuters]

The US’s action could potentially affect clothing exports from other Asian producers such as Bangladesh, Vietnam, and Cambodia, if they contain cotton from China, according to Sheng Lu, an associate professor in the Department of Fashion & Apparel Studies at the University of Delaware.

“Cotton made by XPCC are used by garment factories throughout China and exported to other apparel producing countries,” he told the Bloomberg news agency.

The US imported about $11bn in cotton textile and apparel products from China in 2019, but depending on how US Customs enforces this order, it could target a much broader array of products, Lu said. The order also sends a strong signal that the issue of forced labour in Xinjiang is not over yet and there could be other actions in the future, he said.

Biden has pledged to work with US allies to bring pressure on China to curb human rights and trade abuses. Trump in recent weeks has increased action against major Chinese state companies, banning access to US technology and investments.

Source: News Agencies

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