January 14, 2021

By Kenneth Rapoza, CPA Industry Analyst

Homeland orders Customs and Border Protection to hit Xinjiang, China with a province-wide ban on imports of two of that state’s most important commodities. More to come?

Customs and Border Protection (CBP) on Wednesday installed a regional ban against all cotton and tomato goods sourced from Xinjiang province in far western China.

To-date, CBP has only issued business-specific bans against forced labor goods from China, versus country-wide product bans for certain other countries. Moving beyond business-specific bans when forced labor is involved is a policy CPA has advocated, both to CBP directly and in Congress.

“The Chinese government’s actions are clearly contrary to American values and the tactics are straight out of the authoritarian tactics of the 20th century,” said Homeland Security Secretary Ken Cuccinelli. “We will prevent goods made by forced labor from entering US commerce. I’ve said this before: Made in China does not just indicate a country of origin; it’s a warning label,” he said, adding that CBP seizes more Chinese counterfeit goods and items made from slave labor than any other country.

The Withhold Release Order (WRO) on China cotton and tomato derived goods goes into effect immediately. WROs instruct CBP agents at US ports to detain shipments contain goods to be “reasonably suspicious” of having been tainted by forced labor.

Cuccinelli said other countries “who respect human rights should do the same thing.”

The UK says it will start fining companies that source from Xinjiang. China warned that they were making a mistake.

A handful of NGOs have been following Uyghur abuses in Xinjiang. This summer, the Jamestown Foundation translated some Chinese documents showing evidence of detention of the Muslim minority group, and forced sterilization in order to make sure the Uyghurs never surpass the Han population in Western China.

Directors Jean-Baptiste Malet and Xavier Deleu directed “The Empire of Red Gold” (available on Amazon Prime), detailing how loose trade policies played a role in the sorry state of much of the world’s supply of tomato products.

“China has used forced labor while capturing much of the global market in tomato products, so CBP’s move is very welcome,” says CPA trade counsel Charles Benoit.

Xinjiang is the Chinese hub of cotton and tomato production.

“We appreciate that CBP improved upon last year’s order, which only applied to shipments of products from Xinjiang Production and Construction Corps,” Benoit said of a fourth quarter WRO that targeted that particular company, responsible for the bulk of cotton goods and cotton derivatives coming into the US from Xinjiang.

Not the First Time. More to Come?

In 2015, under the Trade Enforcement Act, the CBP was granted additional funding to crack down on forced labor through a forced labor division. CBP said in a press conference today that it continues to strengthen that division.

CBP’s Executive Assistant Commissioner, Brenda Smith, estimated that China is the source for around $10 million worth of tomato products, including tomato paste and ketchup. Cotton and cotton derived goods, namely yarn and fabrics, equaled close to $9 billion.

In August, CPA sent a letter to Miguel Patricio, the CEO of Kraft Heinz, from our China Task Force inquiring about Xinjiang sourcing. Heinz has at least three subsidiaries in China proper and at least seven contractors.

We alerted members of Congress, including Bill Pascrell (D-NJ), who later mentioned Heinz’s supply chain in China during a September Ways & Means Committee meeting on forced labor in Xinjiang (which you can see here at 1:16:50 minutes into the meeting).

“We remain concerned however that CBP does not have the resources to prevent this ban from being easily sidestepped,” Benoit warned. “The Government Accountability Office has already cautioned that CBP has insufficient resources to police these bans. International country-of-origin fraud is already a serious issue. In this instance, a merchant need only engage in intra-national fraud – listing an origin in another Chinese province – to sidestep the ban. We hope that if any hint of evasion is discovered, CBP will move swiftly to elevate these bans to a national-level, as it has done in Turkmenistan and Malawi in recent years.”

The CBP will have its hands full.

Better policing is really the self-policing of corporations. Multinationals doing business in Xinjiang are giving Beijing the opportunity to say that their policies on the Uyghurs are so sound that even A-list multinationals like Volkswagen and Disney agree with them.

Until companies can prove their cotton and tomato supply chains are clean, CBP will consider them guilty of doing business there until proven innocent.

Mark Morgan, CBP Commissioner, said consumers can also take action. We agree, and we think Washington can set the table here. Strong Buy American policies can set trends.

National bans on forced labor goods coming from China, building a Buy America corporate culture, and paying more than mere diplomatic meeting lip service on human rights will all rip free labor goods from American supply chains.

CBP knows this.

“Shop with reputable retailers,” Morgan said. “Learn about industries that are a high risk for forced labor. Consumers have incredible purchasing power and we urge them to use it,” Morgan said. “Forced labor is a human rights abuse…and it damages our economy.”

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