Senate passes bill to ban Xinjiang imports, State Department issues a warning to businesses

The U.S. Senate passed legislation to ban the import of products from China’s Xinjiang region. In a separate move, the Biden administration issued an advisory warning businesses that they could be in violation of U.S. law if their operations are linked even indirectly to suspected surveillance networks in Xinjiang.

The Uyghur Forced Labor Prevention Act passed the Senate by unanimous consent and would create a “rebuttable presumption” that assumed goods manufactured in Xinjiang are made with forced labor meaning they can be banned under the 1930 Tariff Act.

The bill would shift the burden of proof to importers. The current rule bans goods if reasonable evidence exists of forced labor.

The bill now must pass the House of Representatives before it can be sent to the White House for President Joe Biden to sign into law. The House passed a similar bill in 2020

The bill was introduced by Senators Marco Rubio (R-FL) and Jeff Merkley (D-OR). Rubio previously authored the Uyghur Human Rights Policy Act of 2020 (P.L. 116-145).

Legal risk

In a separate move, the U.S. State Department updated its “Xinjiang Supply Chain Advisory,” which warned that “businesses and individuals that do not exit supply chains, ventures, and/or investments connected to Xinjiang could run a high risk of violating U.S. law.”

The update singled out the solar industry, and said that as of 2020, China controlled an estimated 70% of the global supply for solar-grade polysilicon. It said that China also “dominated manufacturing” in downstream solar photovoltaic components including ingots, wafers, and cells that are assembled into solar modules.

The State Department advisory said that around 95% of solar PV modules rely on solar-grade polysilicon. In 2020, five of the top six solar-grade polysilicon companies, by capacity, were based in China, with 45% of the world’s supply of solar-grade polysilicon coming from four producers with operations in Xinjiang.

The advisory said that because Xinjiang polysilicon is blended with polysilicon made in other regions of China, “separating and tracing the amount and exact origin of any polysilicon from China can be difficult.” It said that at each stage in the solar supply chain, “there is evidence of enterprises with links to the labor transfer programs that engage in coercive labor practices and to the Xinjiang Production and Construction Corps (XPCC).”

The State Department said that the XPCC has been sanctioned by the U.S. government in connection with “serious human rights abuse” and is “closely connected” with polysilicon production in Xinjiang.

The advisory said that the “pervasiveness of forced labor programs” in Xinjiang and co-mingling of solar-grade polysilicon supplies by downstream manufacturers “raise concerns throughout the entire solar supply chain.” It said it is likely that “absent more robust supply chain safeguards, reliable, enhanced auditing procedures, and continued midstream supply chain chokepoints that the majority of global solar products may continue to have a connection to forced labor and the XPCC.”

The Chinese government in June passed measures authorizing it to punish companies that comply with U.S. sanctions. That could create legal jeopardy for U.S. companies that find themselves having to comply with Customs and Border Patrol mandates.

Traceability protocol

In April, the Solar Energy Industries Association (SEIA) released a tool that it said would increase supply chain transparency and help ensure that solar components are “made ethically throughout the solar value chain.”

The Solar Supply Chain Traceability Protocol is a set of guidelines intended to help solar companies meet compliance obligations and “provide customers with assurances that their solar products are free of unethical labor practices.” (Read the protocol here.)

In June, U.S. Customs and Border Protection agents were directed to begin detaining products imported to the U.S. that are made by or that include components made by Hoshine Silicon Industry Co. and its subsidiaries, due to forced labor allegations.

Acting Customs and Border Protection (CBP) Commissioner Troy Miller announced the action in a press briefing on June 24. The action was taken under Section 1307 of the Tariff Act. Section 1307 prohibits the importation of merchandise mined, produced or manufactured, wholly or in part, in any foreign country by forced or indentured labor, including forced child labor. Such merchandise is subject to exclusion and seizure, and may lead to criminal investigation of the imported goods.

In making the announcement, Miller said the CBP action followed an investigation into production processes that offered a “reasonable indication” of forced labor being used by Hoshine. He said the investigation revealed evidence of “intimidation and threats” and “restriction of movement” toward workers.