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The chairman of the Senate Finance Committee sent a letter to eight major automakers to find out whether their supply chains are connected to goods made in China’s Xinjiang province, where forced labor allegedly runs rampant.
In early December, researchers at Sheffield Hallam University in the United Kingdom unveiled the findings of a six-month investigation into the links between western car companies and auto supply factories in the Xinjiang region of China.
Their conclusion was grim. “If you have bought a car in the last five years,” the researchers wrote, “some of its parts were likely made by Uyghurs and others forced to work in China.”
Researchers noted that “convoluted supply chains has left the automotive industry reliant on abusive suppliers,” further explaining that some companies are “sourcing electronics from firms that are employing trafficked Uyghurs in factories” while others are “unwittingly sourcing metals from the Uyghur region, because metal trading companies own equity in Xinjiang smelters.” The greatest exposure, the researchers noted, comes from “the steel and aluminum used to make car frames, axels, bodies, engine casings, wheels and breaks” as some steel and aluminum producers “have shifted into the Uyghur Region under Chinese government subsidies and incentives. But tires, interiors, windshields, batteries and practically every other major part are also implicated.”
Every major car brand is named in the report, including Ford, General Motors (GM), Stellantis (which owns Chrysler, Dodge, and Jeep), BMW, Honda, Volkswagen, Toyota, and Tesla.
It’s a damning report, showcasing just how dependent the entire auto industry has become on parts from China. And it caught the eye of Sen. Ron Wyden (D-Ore.), who chairs the influential Senate Finance Committee. On Dec. 22, Wyden sent a letter to eight automakers seeking answers.
“I recognize automobiles contain numerous parts sourced across the world and are subject to complex supply chains,” Wyden wrote. “However, this recognition cannot cause the United States to compromise its fundamental commitment to upholding human rights and U.S. law.”
As Wyden noted in his letters, the Uyghur Forced Labor Prevention Act (UFLPA) means that nothing made in Xinjiang or with parts made in Xinjiang can be imported to the United States, unless it can be proven they are not made with forced labor. “Unless due diligence confirms that components are not linked to forced labor, automakers cannot and should not sell cars in the United States that include components mined or produced in Xinjiang,” Wyden wrote.
Given this, Wyden asked the automakers to answer seven questions about their supply chains, including whether they conduct their own “supply chain mapping and analysis of raw materials, mining, processing, and parts manufacturing to determine if its supply chain is linked to Xinjiang.”
The senator also asked the companies whether they have “terminated or curtailed, or threatened to terminate or curtail, a commercial relationship with a supplier or sub-supplier, including mines, mineral processors, and any affiliated entities, because of its use of raw materials, mining, processing, or parts manufacturing linked to Xinjiang.” In addition, he asked the companies whether any of their imports had been stopped by Customs officials enforcing the UFLPA.
Several of the companies responded to Wyden’s letter in statements given to CNBC. GM, for example, noted that its supplier code of conduct prohibits the use of forced labor, while a Stellantis spokesperson said the company monitors its suppliers “compliance with our Code of Conduct and respect for human rights by requiring contractual commitments and ongoing evaluation.”
But it’s worth noting that Western auto companies continue to maintain a big presence in China, and it is becoming increasingly difficult to source anything from China that is not connected to the use of forced labor.
“The Chinese government has deliberately shifted raw materials mining and processing and auto parts manufacturing into the Xinjiang Uyghur Autonomous Region (XUAR or Uyghur Region), essentially making international supply chains captive to repressive programs and systematic forced labour,” the Sheffield Hallam University researchers wrote.
That’s why when Congress passed the UFLPA in a near-unanimous vote in 2020, they opted for a blanket ban of all imports from Xinjiang. The actions of the Chinese Communist Party (CCP) in the region mean that the default assumption must be that anything made there uses forced labor.
Given all of this, one would think corporations would put all their effort into moving production out of China. Instead, many are working to undermine the UFLPA.
In October, for example, the Associated Press reported that the Commercial Customs Operations Advisory Committee — whose membership includes companies like GM, Caterpillar, Walmart, Amazon and others — is pushing to hide critical trade data used to trace products made with forced labor. That would severely dampen efforts to track abuses, and make it harder to enforce the UFLPA.
That proposal would need to be approved by Congress, and fortunately, there’s opposition. Sens. Marco Rubio (R-Fla.) and Chris Smith (R-N.J.), who cosponsored the UFLPA, wrote to the customs committee to “pledge to vigorously oppose” such a proposal.
“We hope you agree that no CCP-linked company should profit from genocide and no U.S. consumer should have to buy goods made with forced labor,” the pair wrote. “We will remain vigilant in ensuring that the Uyghur Forced Labor Prevention Act is fully implemented and goods tainted with forced labor do not enter the United States.”
It’s good to see bipartisan support for upholding the UFLPA, and U.S. Customs and Border Protection officials must fully enforce it. Rather than attempt to dodge the UFLPA, American corporations would be wise to focus their full attention on reshoring supply chains so they can be sure that their products are made in accordance with U.S. law.
“The UFLPA imposes a rebuttable presumption that goods mined or manufactured, wholly or in part, in Xinjiang were produced with forced labor and are therefore prohibited from importation,” Wyden wrote to the companies. “This provision protects American companies and consumers from unwittingly perpetuating human rights abuses abroad.”