The Biden administration issued an updated advisory in late September urging businesses to “undertake appropriate human rights due diligence measures to identify potential supply chain links” to forced labor of Uyghurs and other minority ethnic groups in the Xinjiang region of China.
In the same advisory, the State Department also warned of “increased official scrutiny” on due diligence and professional service firms from the U.S. and other countries operating inside China.
“Extra security measures, such as security checks and increased levels of police presence and surveillance, are common in the Xinjiang Uyghur Autonomous Region, Tibet Autonomous Region, and Tibetan Autonomous Prefectures,” the advisory stated. “Authorities may impose curfews and travel restrictions on short notice.”
Due diligence firms have even been the subject of raids, according to the administration. It also noted that government authorities in China “appear to have broad discretion to deem a wide range of documents, data, statistics, or materials as state secrets and to detain and prosecute foreign nationals for alleged espionage.”
Despite the risks to due diligence firms, the report highlighted what it called “the ongoing, widespread, and pervasive risks in supply chains posed by state-sponsored forced labor and other human rights abuses in Xinjiang” and the “urgency for businesses to undertake appropriate human rights due diligence measures.”
The advisory — an addendum to a 2021 document — was released jointly by the State Department along with the Department of the Treasury, Department of Commerce, Office of the U.S. Trade Representative, Department of Labor and Department of Homeland Security.
The risks to due diligence firms could complicate efforts to protect supply chains from links to forced labor tied to Xinjiang.
Richard Graham, director and industry practice lead for Moody’s Analytics, said in emailed comments about the latest advisory that companies “face a thorny task in navigating the constantly changing rules landscape as a result of escalating tensions between the U.S. and China.”
A year after the Uyghur Forced Labor Prevention Act (UFLPA) went into effect, customs enforcers have detained $1.7 billion worth of U.S.-bound shipments, according to a September report from the analytics firm Kharon.
Electronics were detained the most of any product category. Customs also intercepted large numbers of shipments of apparel, footwear, textiles, industrial and manufacturing products as well.
Automotive supply chains are also exposed to components and materials linked to forced labor in Xinjiang, according to a December report from the Helena Kennedy Centre for International Justice at Sheffield Hallam University in the U.K, which got the attention of lawmakers in the U.S. Senate.
China opposed the UFLPA, the country’s foreign ministry calling the law “economic coercion” when it was passed.
