World

The forced labour filling our closets: U.S. is coming after it in an unprecedented way

Penalties against goods made with forced labour take effect June 21. Businesses warn it will cause chaos

Posted: June 05, 2022
Last Updated: June 06, 2022

Here's an uncomfortable thought experiment for the next time you're standing before your wardrobe, running your fingertips through your garments.

Count five items containing cotton. Stop at the fifth garment. Now imagine an enslaved human being. Because by this point, you're statistically likely to own their work.

Rayhan Asat thinks about this constantly. She's a U.S.-based lawyer who comes from an oppressed minority region of China where forced labour is systemic and which produces one-fifth of the world's cotton.

Asat hasn't seen her brother in six years. And when she looks at clothing, she remembers people like him in forced detention and wonders if it was spawned from their suffering.

"I often think about it," said Asat, a fellow at Yale Law and the Atlantic Council in Washington, D.C.

"Every time I'm mindful: Is this made in China? Does it mean it's tainted with forced labour? Is it one of my family members?"

Soon, we'll all be confronted more directly with this reality, courtesy of U.S. lawmakers. Our clothing and our conscience are on a collision course this month.

There's a mounting pile of detailed evidence of human rights abuses against ethnic Uyghurs in China's Muslim region of Xinjiang, a hub for cotton, tomato paste and solar-panel production.

And there's a specific date when things are supposed to change: June 21.

That's the day a new U.S. law takes effect, aimed at reordering international supply chains by altering the behaviour of any company that sells goods to the U.S.

Critics of the measure warn it will cause economic chaos.

What happens June 21

The Forced Labor Prevention Act would penalize importers and seize their goods by toughening older forced-labour laws with unprecedented new measures.

It reverses the burden of proof: guilty until proven innocent. 

From now on, if you're shipping anything into the U.S., and if U.S. officials find out that any of it even a bit of it comes from Xinjiang or from any entity on a future watchlist, it'll be seized unless you can prove there was no forced labour involved.

Needless to say, it won't be easy. 

Importers call it a logistical nightmare and have been pleading with the U.S. government to delay implementation. 

Companies say there's no clarity about how this will work; warn it could raise costs and worsen inflation; and say it's mind-bogglingly complex to weed out every forbidden fibre from fabrics that get sold, and re-sold, across several countries before becoming a final product.

One firm that tracks these illicit goods says its artificial intelligence software counts millions of buyer-seller relationships around the world involving entities linked to forced labour in Xinjiang.

• Leaked photos of Uyghurs interned at Xinjiang detention centres 'devastating,' says activist

The firm's co-founder says his software sees nearly one million direct business-to-business connections with forced labour, and seven million second-hand connections.

"It's in everything," said Evan Smith, whose company, Altana, works with government agencies and companies to map those networks. "Your razor blades, your T-shirts, your antibiotics, your spice rack, your diapers. This stuff is really touching so much of the everyday economy." 

WATCH | Marketplace journalists question companies over forced labour:

Spillover effect on Canada

Make no mistake: this change will have a spillover effect in Canada. Partly because we operate in a trade area with so many cross-border businesses.

This country also has legal obligations under the new North American trade deal: it's committed to stopping forced-labour imports, and the deal also created a forced-labour task force to monitor the issue in the U.S.

Canada enters this era lagging behind; it has not prevented a single shipment since the new North American trade pact took effect, according to a report in The Globe and Mail.

Canada is now looking to tighten its rules with a bill that's nearly passed through Parliament that would force companies to produce annual reports on their supply chains.

The United States has had a forced-labour law on the books for nearly a century  since 1930. It's progressively toughened that law, and has been stopping or seizing hundreds of shipments in recent years. 

But importers sound panicked about the newest change. Some voiced their worries last week at a U.S. briefing session for industry.

U.S. Customs deluged with panicked questions

CBC News listened in on an online briefing where businesses flooded U.S. Customs officials with far more questions than could be answered in the allotted time.

More than 700 people participated in the briefing, typing out questions like: What proof of innocence is sufficient? How do you define a Xinjiang product with an address? Will there be DNA testing on cotton fibres? Will companies be liable for the actions of their suppliers' supplier? And what happens to seized goods can companies get them back and sell them elsewhere?

Some participants expressed frustration. One said supply chain problems are already a major drag on the U.S. economy and that this could worsen shipping delays.

Others vented about the reversed burden of proof: "Proving a negative is nearly impossible. How would someone prove that all presenters [in this briefing] are NOT forced to be here?"

U.S. officials promised more specific guidance will be released on June 21, the day the new law takes effect. Officials insisted the new law will be applied immediately.

Compounding the complication is pressure from China. 

That pressure includes threats. Companies that raise concerns about rights abuses are hit with boycotts in China. H&M was forced to close numerous stores. 

• Chinese government responsible for genocide in Xinjiang, says independent report

China also has a new law allowing it to punish companies deemed to interfere in its internal affairs  the consequences include possible asset seizures; denial of entry into China; and a ban on Chinese citizens working with the company. 

"[These competing U.S.-Chinese threats] have companies in an impossible situation," said Eric Miller, a Canadian-born, U.S.-based trade consultant who has clients in the clothing industry.

China fights back

The Chinese government position: That claims of genocide are a fabricated scandal, being used by the West as an economic weapon to hurt China.

In Beijing's description, its crackdown on Uyghur identity, with suspected nationalists sent to re-education and work camps, is an effort to bring national unity following past separatist terrorism. And it calls the U.S. a hypocrite given its own use of prison labour in various states.

China is also making it harder to trace products to Xinjiang.

For example, Uyghur prisoners are being moved to work in factories elsewhere in China: one Australian study found more than 80,000 Uyghurs were transferred out of Xinjiang between 2017 and 2019, and other reports say those forced transfers keep happening.

Mapping transactions was challenging even before this change. Miller counts 101 steps to make a simple T-shirt, from gathering the cotton to shipping the final product, across multiple factories, in different countries with different legal systems.

All this helps explain why Xinjiang cotton keeps showing up even in products of companies that say they've changed their practices. It's reportedly happened to Adidas, Puma and Hugo Boss. 

According to several surveys on hundreds of U.S. fashion products by the forensic analysis company Oritain, around 16 per cent contained traces of what appeared to be Xinjiang cotton.

The head of a Canadian industry lobby group said the U.S. policy is creating maximum confusion.

"Lots of doomsday scenarios," is how Bob Kirke, executive director of the Canadian Apparel Federation, described the industry mood. "We're now less than a month away. And we have no guidance."

'It really upsets me'

Rayhan Asat, however, has little patience for complaints about how complex this will be. She said the challenge for companies pales in comparison to what her people face  being forced into re-education camps; tortured in so-called tiger chairs; enslaved; and having their culture beaten out of them.

"For these companies to cite difficulty? Let me tell you what's difficult," she said in an interview with CBC News.

She said that after his years in solitary confinement, her brother Ekpar looks like a shadow of the buoyant tech entrepreneur she once knew. 

Asat said he's only granted a video or phone call a few times a year. The calls typically last a minute, and if he hasn't said goodbye at 59 seconds, he gets cut off with no farewell.

"It really upsets me, to be honest. The difficulty of doing due diligence is nothing compared to the human suffering taking place in the Uyghur region."

Asat said international companies have been on notice for years that the Uyghur region is awash in forced labour, and they could have acted sooner if they cared.

WATCH | Report highlights alleged abuses in Xinjiang:

New law could create a new industry

New technologies could be part of the solution.

Oritain, for example, does DNA analysis. Altana, which maps out supply chain relationships and warns clients if they're working with a firm linked to forced labour, was co-founded by Alan Bersin, a former U.S. customs commissioner under Barack Obama, with the specific goal of cracking down on forced labour.

Bersin's partner, Evan Smith, describes one encounter a few weeks ago with a major apparel brand Altana has begun working with.

He said the company believed it had weeded forced-labour goods out of its supply chain. But it was stunned to hear that a Sri Lankan garment mill it worked with had a Vietnamese supplier working with a Chinese company partnered with a Xinjiang entity.

• U.S. lawmakers planning economic battle with China have some questions about Canada

An executive called the Sri Lankan mill, which, Smith said, at first insisted it had broken off any Xinjiang ties then admitted there might have been an exception.

This sort of tracking will carry new costs for companies. Smith's firm charges six-figure fees for now, and will add less pricey services eventually.

He said companies better get used to this new reality.

Smith compares it to the post-9/11 moment when the U.S. toughened financial-disclosure laws for banks as part of its anti-terrorism efforts.

"It's hard. But it's possible," he said.

"And the private sector should assume it will have no choice. This is going to become the norm, and not the exception. All things are pointing to a new paradigm: Thou shalt know your supply chain."