This goes way beyond solar panels...
US Crackdown on Forced Labor in China Risks Further Supply Chaos
Jennifer A. Dlouhy and Jenny Leonard
Fri, June 3, 2022 at 7:24 AM
(Bloomberg) -- Pandemic and war have upended American supply chains. The next shock may come from the US campaign against human-rights abuses in China.
A law due to take effect June 21 will bar imported goods partly or wholly made in the Chinese manufacturing hub of Xinjiang -- unless companies can prove the products have no ties to forced labor. Passed unanimously by Congress, and with strong support from unions and activists, it aims to make sure that there’s no place in the US economy for merchandise made by workers languishing in detention camps.
Unusually, with the deadline less than three weeks away, the US government isn’t giving business much of a heads-up about how the measure will be enforced. At a Customs briefing on Wednesday, the message was essentially: Wait and see. That means nobody really knows how big a chunk of America’s $500 billion-plus in annual imports from China could get ensnared.
That question has been the subject of a concerted behind-the-scenes campaign by corporate lobbyists and fierce internal debates within President Joe Biden’s administration -- because there’s a huge amount riding on the answer.
More Price Hikes?
For US consumers already beset by decades-high inflation, stringent policing of the new law could mean another wave of shortages and price hikes. Businesses such as Apple Inc. and Nike Inc. lobbied on the legislation last fall.
And for Biden, whose Democrats must defend slim majorities in November’s congressional elections, there’s danger in both directions. Maximal enforcement risks a fresh supply crunch in an economy already showing signs of stagflation -– while soft-pedaling the measure would likely trigger Republican charges that he’s weak on China.
If enforcing the law ends up disrupting the economy, advocates say, that’s a feature and not a bug -- because only a credible threat to detain imported goods will force companies to rigorously police their supply chains.
The frontline regulators at Customs and Border Protection are warning of trouble ahead.
Stepped-up scrutiny of imports under the law “will likely exacerbate current supply-chain disruptions,” the agency said in its latest budget request. They won’t be limited to goods coming from Xinjiang, or even China. All US imports “will be subject to delays in processing time,” as officials scrutinize what they estimate will be an additional 11.5 million shipments a year, more than 10 times the previous figure.
Burden of Proof
Xinjiang, a province in northwest China, has long been a flashpoint in the escalating standoff between the world’s biggest economies. The US accuses China of mass detentions and other forms of oppression that amount to a genocide, and says hundreds of thousands of detainees -– mostly Uyghur Muslims or other minorities –- have been forced to work against their will. Beijing denies the allegations, saying they’re part of a campaign to halt China’s economic rise.
Long before Congress passed the Uyghur Forced Labor Protection Act in December -- since 1930, in fact -- it’s been illegal to knowingly import goods made with forced or convict labor.
But the new measure marks a major change, because it effectively shifts the burden of proof from the government to importers themselves. They must now provide “clear and convincing evidence” that merchandise identified as suspect by the federal government, or manufactured even partially in Xinjiang, wasn’t produced with forced labor.
That amounts to guilty until proven innocent, business groups complain. Lobbyists for some of the biggest industry associations in Washington -- from the National Retail Federation to Autos Drive America -- have spent months campaigning against a hardline approach, and urging a gradual phase-in of enforcement.
Some business groups sought -- unsuccessfully -- to persuade the administration to look the other way when products have only a small overlap with Xinjiang, and encouraged it to focus on high-priority areas identified by Congress, including cotton and tomatoes.
“For the administration to move on to much more complex, value-added goods and detain those goods at the border, that would cause even more supply-chain snarls,” says Ed Brzytwa, vice president of international trade at the Consumer Technology Association, which represents an industry that relies heavily on imports.
Full story: finance.yahoo.com |
