Xinjiang Sanctions Episode 3 - Anasuya Syam

Xinjiang Sanctions

In Episode 3, we hear from Anasuya Syam, Human Rights and Trade Policy Adviser at the Human Trafficking Legal Centre. James asks Anasuya about US import bans on goods made with Xinjiang forced labour, and the Uyghur Forced Labor Prevention Act.

Transcript

James Cockayne 0:00

Welcome to Xinjiang Sanctions, a podcast looking at the global response to forced labour in Xinjiang, China. I'm James Cockayne, a Professor of Global Politics and Anti-Slavery at the University of Nottingham. I've been working on modern slavery and forced labour issues for the last decade and researching Xinjiang forced labour for the last year. You can see the results of that research at www.xinjiangsanctions.info. In this short podcast series, I speak with global experts to understand why forced labour emerged in Xinjiang and what governments and business are doing to try to address it. My guest today is Anasuya Syam, Human Rights and Trade Policy Advisor at the Human Trafficking Legal Center. Welcome Anasuya.

Anasuya Syam 0:43

Thanks, James. It's a pleasure to be here.

James Cockayne 0:44

Tell us a bit about the Human Trafficking Legal Center, Anasuya.

Anasuya Syam 0:48

Thanks, James. The Human Trafficking Legal Center is a nonprofit based in Washington DC. We serve as a pro bono clearing house that connects trafficking survivors with highly skilled legal representation to hold traffickers accountable. One of our primary areas of focus is labour trafficking in global supply chains. And we do this by conducting cutting edge research to identify gaps in services and system failures. And we also seek to transform systems to prevent forced labour in global supply chains. So a lot of our trade work fits into that. The, the idea that we want to have systems change to address forced labour.

James Cockayne 1:28

So you mentioned supply chains there and your title is Human Rights and Trade Policy Advisor. What does trade policy have to do with human trafficking and especially in a place like Xinjiang?

Anasuya Syam 1:41

So trade policy for years now has had some links to addressing forced labour in global supply chains, the US has had an import prohibition against products made using forced labour, prison labour and forced child labour since 1930. So that's been 90 years in the books. But it's only really been since 2016, that the law was enforced by US Customs and Border Protection to the extent that we're seeing today. And what we're seeing right now is the start of a global trend. And this goes back to one of our core areas of work that I mentioned when I introduced the Centre, which is about transforming systems to prevent forced labour in global supply chains. And we're seeing trade policy rise up to that level to transform systems and the way business is done to make sure that this prevents the occurrence of forced labour in the future. So import bands are really coming up right now. And we can see these debates happening in the EU, in Australia, in Canada, and in many other countries. It's a very topical issue.

James Cockayne 2:52

So as you said, there's been an import ban in place on the books in the United States for almost a century now. What is that? How does that work? Tell us a bit about the relevant law and how that's enforced.

Anasuya Syam 3:06

So the import ban is enshrined in Section 307 of the US Tariff Act of 1930. It has its roots in protectionism. When we are talking about when the law came about in 1930, it was to protect domestic US manufacturing. But since then, and as I mentioned earlier, when the law was improved in 2015, by an amendment under the Obama Biden administration, there was a loophole in the law that had kind of swallowed enforcement efforts. Because the import ban had an exception - goods that were not made in the United States to meet American demand, even if they were made using forced labour or prison labour overseas, they could still be imported into the country to meet that demand. So once that loophole, the consumptive demand loophole was removed. we saw US Customs now having access to this tool and NGOs being able to leverage this tool and incorporate it into their campaigns to address forced labour. So we saw petitions coming in from NGOs, like Global Labor Justice, International Labor Rights Forum, those were some of the first petitions that we saw in 2016 on cotton from Turkmenistan, because it’s systemic state sponsored forced labour in Turkmenistan. We saw a petition on cotton from Uzbekistan, and then we realised, okay, this is something that CSOs can really get behind. Because this law relies quite a bit on external sources to share information about forced labour happening around the world. CBP relies on external sources, they do have the power to self initiate actions, based on their own investigations into forced labour. But by and large, we see a reliance on NGO partners, on unions, on worker representatives around the world to share this information.

James Cockayne 4:59

So US Customs and Border Protection is looking to these civil society organisations to understand which shipments coming into the United States might potentially be made with forced labour. Is that right?

Anasuya Syam 5:12

Well, more so for the evidence on forced labour that's happening on the ground in so many different regions around the world, but also to a certain extent to identify shipments that are coming to the United States. But of course, access to trade databases is not something that's available to a lot of different organisations. Because, you know, it's prohibitively expensive to some, but where possible, where that information is available on the ground at that factory level or the unit level. it's known that that entity exports to the United States, that's definitely information that is fed into US Customs investigations.

James Cockayne 5:53

And is this tool that you're referring to, is this, is this what we sometimes hear referred to as Withhold Release Orders? What does that mean?

Anasuya Syam 6:00

Yes, so Withhold Release Order is the technical term for a detention order that US Customs can issue once it is convinced reasonably, that there is forced labour in the product that it is investigating. So once the investigation is complete, the Commissioner of US Customs and Border Protection issues instructions to directors at all US ports of entry, detailing the Withhold Release Order that is in effect, the product, the region, if the specific factory or facility information about that, and instructing the directors at port and port officials to stop these goods at the border.

James Cockayne 6:42

And what happens to the goods once they stop?

Anasuya Syam 6:45

So the goods are detained for a certain period of time. And the law gives importers the right to either contest the detention and say, hey, our products are not produced using forced labour and here's the evidence, or in the alternative, they are allowed to re-export the goods to other countries.

James Cockayne 7:04

So they can send those goods that the US Customs and Border Protection has concluded, are more likely than not made with forced labour, they can send them to some other market to be sold there?

Anasuya Syam 7:15

Exactly any market that does not have an import ban. So it lacks import restrictions on forced labour. And we, we’re seeing trends in this re-exportation because this is an option that most importers would like to use, rather than contesting the detention order, which requires you to have extensive supply chain documentation in place.

James Cockayne 7:40

Would it be fair then adopting a devil's advocate position to say that this tool works more to cut the link between these goods and US consumers than it does to actually prevent the use of forced labour in the first place? Or is that too simplistic an analysis of what's going on here?

Anasuya Syam 8:01

What we are seeing in the first instance is that companies are trying to proactively remedy the situation once they've been targeted, as opposed to simply cutting and running or leading to massive closures of their operations. So we are optimistic that it's more likely that the companies want access to US markets. And as more countries are thinking about import bans and as more borders close, that they will have no choice but to remedy the situation or just risk the financial, reputational and legal consequences.

James Cockayne 8:38

So as those risks of losing access to the US and potentially other markets are increasing the costs they incur from the changes in business practice to remove forced labour from their supply chain start to become a more worthwhile proposition. Is that, is that the conclusion?

Anasuya Syam 8:56

It is because right now, what import bans are doing is bringing risk into the equation in a way that many other measures to date have not. And it has become a serious compliance issue for companies and it's taken four/five years of import ban enforcement for it to rise to this level. I mean, the enforcement doesn't just stop at a showing a Withhold Resource Order. That's just the first step, real enforcement is when goods are stopped at the border. And when CBP engages the companies to remedy forced labour. Now, we've seen companies really want to get the ban revoked or modified and for that, they really have to provide proof that forced labour no longer exists in their supply chain.

James Cockayne 9:47

Have we seen any cases where that's led to a company remedying past harms? Or is this always just about changing business practices in a way that prevent future harms to workers?

Anasuya Syam 10:00

We've seen a bit of both and Malaysia is evolving as a case study and there's been a lot of reporting from Malaysia on the reimbursement of recruitment fee payments that migrant workers have made. And these have gone into millions of dollars. If you see US Customs and Border protections trade and travel report from fiscal year 21, CBP has stated that more than 30 million in recruitment fee payments have gone out on the back of Withhold Release Order processes. So that is significant, and definitely something that remedies a bit of the past harm that you mentioned. But it's, of course, just one step. We want the withhold resource process to be more forward looking and ensure that it really goes to the root causes, and the systemic issues in that particular supply chain.

James Cockayne 10:53

So we've been talking about this tool a little bit in the abstract, has it been used specifically in the context of alleged forced labour in Xinjiang?

Anasuya Syam 11:03

Since at least 20, late 2018 and early 2019, CBP has been targeting entities in the Xinjiang region, we've seen some of the first Withhold Release Orders or retention orders issued against hair product manufacturers from the Uyghur region. And I believe there was this really alarming detention that kind of shocked our collective conscience which involved an $800,000 shipment of human hair weaves traceable to detainees from the Uyghur region, and that that reporting and that public image of the of the detention really brought home the issue, I think, in a way, that maybe some of the other detentions have not. And this was one of the few instances where CBP also made that detention public. Usually, these detentions are not public.

James Cockayne 11:58

Is this incident that you've mentioned Anasuya - where the shipment of hair products was detained - is that the only supply chain from Xinjiang that has been affected so far? Or have there been other industries in supply chains targeted by the use of withhold release orders as well?

Anasuya Syam 12:17

There have been several other industries targeted under Withhold Release Orders, including cotton and tomatoes, computer parts, and a host of other industries. There have been chemicals that have been targeted, there has been more than 10 or 12, Withhold Release Orders against different entities.

James Cockayne 12:38

And how are the different sectors reacting to this, this increased risk as you described it? Are they taking it in that into their stride? Are they simply factoring it in as a cost of business? Or are they taking steps to change the way they source their products to avoid these risks?

Anasuya Syam 12:58

I think that the one Withhold Release Order against all cotton, and all tomatoes from the Uyghur region that really shifted practices. that really changed the game. Because that was the first time such an expansive region wide Withhold Release Order was issued by US Customs. And you can hear US customs officials say that that one Withhold Release Order, literally was like enforcing 100 other Withhold Release Orders. Just because of the cotton production and tomato production that happens in the Uyghur region and how it's then meshed with global supply chains. So because of the focused enforcement of that Withold Release Order - and last year, just to give you a number, more than 1469 shipments worth 489 million US dollars were detained. And my understanding is that a bulk of those pertained to cotton, the cotton and tomato Withhold Release Orders among others, including solar, which is also a target under the Withhold Release Order. So that enforcement, seeing US Customs do that at ports, really sent the message to the business community that this has been taken very seriously and US Customs does not tolerate forced labour in global supply chains.

James Cockayne 14:20

So almost half a billion dollars you said there I think if I heard correctly, is that right?

Anasuya Syam 14:25

Give or take. But that figure is across all Withhold Release Orders. What we've heard is that a bulk of that enforcement is actually under the Uyghur region Withhold Release Orders.

James Cockayne 14:36

So clearly, section 307 is having quite an impact. And as you said, it's creating a sense of risk. Does that depend on the level of enforcement resources that are available to US Customs and Border Protection?

Anasuya Syam 14:52

Yes, of course, the success of the law really depends on how it is being enforced. The broader the enforcement the more impact it's going to have on global supply chains and putting pressure on the Chinese government. Right now. I'm aware that US Customs and Border Protection got a fresh infusion of funding this year to enhance capacity to enforce the law, including additional personnel, enhancing the targeting practices, and so forth. So, we really hope that that infusion of funding is going to ramp up enforcement. CBP has already started enforcing the law on June 21st, when it took effect. Just a few days later, we heard of solar shipments being solar module shipments being blocked, at port. So CBP is on it. And they are very clear that they're committed to complete and robust enforcement of the law. But we do expect to see a lot more in terms of enforcement across different sectors. We know that cotton, tomatoes, and polysilicon are some of the industries identified for priority enforcement. But we know that there is, there's a lot of other industries and manufacturing that's based out of Xinjiang, and that stains global supply chains and, and one of the areas that we are all going to be keenly watching is the inclusion of companies to the Entities List, that the Forced Labor Enforcement Task Force has to update every now and then. Right now what we have is just a baseline of companies on the list from pre existing Withhold Release Orders, from Department of Commerce Entity List, but we see the Entity List as something much bigger than what it currently is.

James Cockayne 16:41

Tell us a bit more about the Entity List. What work does it do in the law?

Anasuya Syam 16:46

As I mentioned earlier, the law creates a rebuttable presumption that goods either linked to the Uyghur region, or to entities that have links to forced labour in the Uyghur region and elsewhere in China are presumed to be made using forced labour. And this presumption can be rebutted only by clear and convincing evidence, which has to be submitted by the importer. So the entities identified on this list are those that have received have been beneficiaries of the Labour Transfer programmes. These are coercive programmes administered by the Chinese government in Xinjiang and poverty alleviation schemes and a host of other coercive measures that the Chinese government implements. We know that Uyghurs and other ethnic minorities are being transported out of the, out of Xinjiang into other parts of China, under these programmes, so this list is supposed to be all encompassing, and involve entities that have historical and current links to these government programmes. So right now, we only see a few entities on the list, but we know that entities are going to be systematically added and there's also opportunity to remove entities from the list.

James Cockayne 18:03

So just going back a step if US Customs and Border Protection already had this powerful tool in Section 307 of the Tariff Act, why did Congress feel it was necessary to enact the Uyghur Forced Labor Prevention Act in the first place?

Anasuya Syam 18:20

I think the primary motivation was to respond to the systematic abuse and the evolving evidence around genocide and crimes against humanity happening in China. And we know that global supply chains are enmeshed in this issue so deeply and to have that economic pressure on the Chinese government, we needed a law that is much broader in scope than what was happening under the Withhold Release Order process which was targeting entity by entity, region by region. So now we have an all encompassing law that is that presumes that anything made using Uyghur forced labour in the in the Xinjiang region, or through these labour transfer schemes, is made using forced labour.

James Cockayne 19:08

Has there ever been a law like this adopted in the US before?

Anasuya Syam 19:12

There is precedent for this the US in 2017 as part of the North Korean sanctions regime, enacted a rebuttable presumption of forced labour against North Korean nationals working in global supply chains. This is also in response of a kind of degree of control the North Korean regime has on the wages and on the labour conditions of nationals working outside of North Korea, even in China, we've seen North Korean nationals working in different cities across China in really coercive conditions. So as part of the sanctions regime, there was a rebuttable presumption on forced labour.

James Cockayne 19:49

Presumably US importers import a lot more from China and even from Xinjiang specifically than they do from North Korea. Is that a fair assumption?

Anasuya Syam 20:00

That is but what we don't capture in that is the scale of North Korean workers or just any of these supply chains that are routed by a third countries where there's manufacturing and processing happening by third countries. Direct imports, be it North Korea or even Xinjiang, they've definitely dropped over the years. So right now, the focus is on third countries that are receiving imports and raw materials from these regions for processing into finished goods.

James Cockayne 20:27

And what about other countries? Do other countries have these kinds of import bans in place that are relevant to trade with Xinjiang?

Anasuya Syam 20:42

Yes, one country that has a law in its books, that has an import ban in its books is Canada. And this is because Canada, US and Mexico are obligated under the US Mexico Canada Trade Agreement or the new NAFTA to enact import bans and coordinate to ensure that there is no cross border movement of goods made using forced labour. So right now Canada has this law on its books. It was enacted in July 2020. Mexico is yet to enact a law like this.

James Cockayne 21:15

Are other parts of the world considering doing something similar?

Anasuya Syam 21:19

Yes, other parts of the world, it's still at proposal stages. We know the European Union is designing an import ban instrument as we speak, we should hear something in in a couple of months. And we know that Australia has had some debate around it as well. And right now with a big push from the US in the G7 meetings and the G20 meetings, we're seeing this on the agenda, on the global agenda for these countries. So we hope to see import bans and all of these countries, the big importing economies of the world, need to enact import bans. For it to be truly effective, there has to be coordination, and some kind of recognition of import bans that are implemented in another jurisdiction.

James Cockayne 22:06

So signs that some countries are adopting these bans. But is it not possible for importers to simply reroute their, their trade routes to run through whichever countries set the bar the lowest, Anasuya?

Anasuya Syam 22:22

Yes, and we are extremely concerned that other countries are becoming dumping grounds for products made using forced labour that are denied entry by the United States. To give an example, Canada has had an import ban on its books since July 2020. But there is only one shipment that we know of that has been detained under the law. And even that was released recently, in contrast to the thousands of shipments that the United States has been blocking. Now, since the importer has the option to re-export these goods, we are worried that it is going into Canada, into into Mexico. But sometimes even before it comes to the United States, the companies make that call or let's just you know, shift our business operations and focus more on on Europe. And we saw that happening when there was a slew of orders against Malaysian glove manufacturers. We heard that kind of of statement from senior management that some of these glove companies. But that is something that's a real concern. While the US is doing it's a bit, and of course, it's not a perfect system, If other countries don't adopt import bans and also recognise or have some degree of mutual recognition of each country's import bans, I think we're going to have really fractured supply chains. And this is going to be counterproductive to the goal of import bans on economic pressure that this is meant to create. So the goal is to have no safe harbour for forced labour anywhere in the world. And for that we need all the big importing economies at least to start off with to enact import bans.

James Cockayne 24:12

So I guess that also raises another question, which is that if there are all of these steps being taken to prevent the import of goods made with forced labour, is there anything being done to stop investment by actors, let's say in the US, into the companies that are making these goods with forced labour in the first place? Is there anything preventing the outflow of capital from Western capital markets into these companies and supply chains around the world?

Anasuya Syam 24:45

The primary target of these laws is the foreign producer or the foreign supplier. But that is not to say that there aren't any mechanisms to to go after the US buyers or multinational companies in the United States. So in the US, we have related provisions under the Tariff Act under which a US entity can be targeted for importing goods made using forced labour. And the US government did issue a $575,000 penalty a couple of years ago, against a US importer for importing the artificial sweetener stevia using prison labour in China. We have not seen US Customs take another action since that 2020 imposition. But we are optimistic and we definitely press the agency to issue more monetary penalties against US entities.

James Cockayne 25:42

But there are, as you say, Anasuya moves to use new and creative levers such as financial sanctions and, and travel sanctions. One might think that that points to a level of policy commitment in western capitals to see this through, is that a fair read? Are you optimistic about the direction of travel in the western policy response?

Anasuya Syam 26:08

I think there is a whole of government approach in the way forced labour is addressed in global supply chains, the import bans don't sit in isolation. They do form a part of the US government strategy, which includes, you know, the US Treasury, there's the US Trade Representative’s office and all have different authorities to go after forced labour in supply chains in different ways. So import bans are just one piece of the puzzle. All of this, which you mentioned James, they all have to work in tandem, for this to be truly effective. And I know the Investor Alliance on Human Rights are they're really working on on trying to create awareness on the part of investors. And I've been seeing a lot more investors in meetings on forced labour and global supply chains. Nowadays, it's not uncommon to see a Blackrock sitting in on meetings on import bans and forced labour in supply chains.

James Cockayne 27:02

And I guess that also assumes or presumed that ultimately, this kind of economic pressure will lead to policy change in China. And I guess that's a big question mark for, for many commentators. We don't necessarily have a hugely successful track record of using these kinds of levers and sanctions pressures in the West to produce pro-human rights policy change in China. Do you think that, that we should be optimistic in thinking that this will work this time around?

Anasuya Syam 27:39

This is a historical and unprecedented law, and the kind of supply chains that are going to be implicated under this law, it's something that we, that the United States has thought long and hard before enacting the law, we understand the repercussions. It is disruptive to the global economy, and it has to be disruptive to the global economy, because the system has, has had its failures and has been broken for a while now. The way business is being done, that has to be changed. So the message, the central message of these trade policies that are now emerging, is that it cannot be business as usual. And that you need to have an intimate understanding of your supply chain, you can no longer hide behind complexities of your supply chain, not knowing who is the supplier beyond tier one, you need to know where the raw materials come from, if it's cotton you need to know where your bailing comes from, we're talking about real level transparency here. So I think these laws, they are ambitious, but I think they have already had considerable impact. We've seen shifts in in corporate behaviour, more companies are proactively doing a lot more to address supply chains than ever before, because as I mentioned earlier, it's a big compliance issue now. Governments are shifting their policies. Malaysian government has responded with a slew of policy changes since the last two, three years of of action taken against the glove and palm oil industry in Malaysia. And we're also seeing remedy go out to workers held in forced labour in in the Malaysian context, as I mentioned earlier, so we're really seeing these three different buckets where there's change. So this is something that hasn't been done before. But I think it's definitely not the last that we're going to see of import bans. As we noted earlier, this is just the start of a trend. And this is now the new normal. If you don’t know your supply chains, these are the consequences, you’re going to face.

James Cockayne 29:45

A new normal. That seems a great place to end it. Thank you so much for your work on these important issues and Anasuya and for spending a bit of time to explain the results to us today.

Anasuya Syam 29:56

Thank you. Thank you so much for having me.

James Cockayne 29:58

Thanks for listening to this episode of Xinjiang Sanctions presented by me, James Cockayne. You can find out more about our research project at www.xinjiangsanctions.info, where you can download our study, our policy briefs and explore datasets on government, Chinese and corporate responses. Thanks to the University of Nottingham Rights Lab and to our funders, the UK Foreign, Commonwealth & Development Office for their support with this research and the podcast which is available on all major platforms. Don't forget to subscribe if you're interested in accessing all the episodes from the series.

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