As the US deliberates over the scope of new legislation cracking down on imports from Xinjiang, fresh research warns global aluminium supply chains could be exposed to the Chinese region.
US-based consultancy Horizon Advisory’s analysis of open account data including government and corporate documents finds eight major Xinjiang-based aluminium producers – accounting for roughly 17% of China’s total aluminium output – have possible ties to the state-sponsored transfer of labour programmes.
Horizon’s research finds three of the companies are based in the Zhundong Economic and Technological Development Zone, which “appears to play an organisational role in Xinjiang transfer of labour programmes”.
Beijing claims such programmes work to lift people out of poverty and promote economic development. But NGOs and western governments say they are likely a form of forced labour, uprooting Uyghur Muslims from their homes, detaining them and forcing them to work in factories across China.
According to the report, some of the producers have direct ties to the Xinjiang Production and Construction Corps, a state entity sanctioned by the US government in July 2020 for its alleged role in perpetuating human rights abuses.
Backed by favourable government policies and ready access to cheap coal, Xinjiang’s production of primary aluminium has boomed over the past decade, with China the world’s largest producer of the metal.
Horizon suggests various global supply chains, including those of automotive, aerospace and electronics products, could all be exposed to aluminium produced in Xinjiang – and by extension, human rights risks.
“Production in Xinjiang is largely for primary aluminium, which is then processed into alloys further downstream and deployed in a broad swathe of industries. Everything from automotive, and aerospace to household goods could be drawing on these supply chains,” Nathan Picarsic, Horizon co-founder tells GTR.
The analysis comes as the US considers the potential scope of the Uyghur Forced Labor Prevention Act (UFLPA), signed into law by President Joe Biden in late 2021 and set to come into force in June.
Cotton, tomatoes and polysilicon – used in the manufacture of solar panels – have all been identified as “high priority” goods to be watched closely by customs officials.
Picarsic suggests aluminium could be added to this list in the next six months but says it is a “thorny issue” and that it will be difficult to track the metal all the way back to producers located in Xinjiang.
“It’s going to be hard for companies to trace and limit their exposure to the region,” he tells GTR. “As primary aluminium moves its way out of Xinjiang, it’s not tagged with a tracking device. There’s a reason why these supply chains are not very transparently monitored within China.”
In a recent response to a US government consultation on the UFLPA, the United Steelworkers Group said global audit firms have halted the inspection of labour practices in Xinjiang due to “challenges faced by, and threats made to, auditors”.
China has also enacted legislation that creates potential civil liability for any individual who facilitates the implementation of the UFLPA or other foreign sanctions deemed to threaten its national interest.
US companies are currently waiting to see how the new Uyghur legislation will be enforced, with a government task force set to publish documentation informing companies how to conduct their supply chain due diligence.
In particular, the textiles industry has voiced concern over the enforcement of withholding release orders (WROs) in the past year.
A group of US-based fashion and retail organisations wrote in their feedback to the UFLPA consultation that the US Customs and Border Protection has issued “broad and inconsistent requests for documentation that do not identify or target the problematic supplier”.
In instances where importers have been able to collect the “hundreds of documents requested to evidence goods were not subject to a WRO”, they say the US customs body declined to release the goods and provided no explanation.
“As a result, goods spoil, the products are no longer timely, US importers incur hefty demurrage fees and are often forced to break fulfilment contracts,” the letter reads.
“Goods that are shipped in containers with the products allegedly produced with forced labour are also frequently detained indefinitely. According to one company’s experience with WROs, nearly 40% of the product detained was co-loaded and not subject to the WRO.”
Published
13-Apr-2022
