Amid mounting concerns that some apparel and cotton products imported into the US from China may be made with forced labour, US Customs and Border Protection has issued a new factsheet to help companies mitigate potential risks in their supply chains.
Such are the concerns are that clothing supply chains are tainted by forced labour in China’s Xinjiang region that human rights campaigners have called for apparel brands and retailers to end all sourcing – from cotton to finished garments – from China’s Xinjiang region within 12 months.
The advice set out in ‘Responsible Business Practices on Forced Labor Risk in the Global Supply Chain‘ recommends the Department of Labor Comply Chain principles to create a social compliance system as a best business practice. It also notes some of the key questions to ask US importers.
Comprehensive supply chain profile
- Does the US importer have a comprehensive understanding of the natural supply chain from sourcing of raw materials to subcontracting manufacturing to the assembly of finished goods destined for the US?
- For their products, has the US importer conducted a comprehensive risk assessment of forced labor in the global supply chain and conducted onsite production visits to the factory, farm, or mine for high-risk countries?
- Is the US importer engaged with industry specific multi-stakeholder initiatives?
Written Code of Conduct
- Has the US importer developed and applied a formal written code of conduct for all international interactions associated with the sourcing of foreign goods?
- Is the code of conduct shared with all suppliers in the global supply chain as a stand-alone document or as addendums to purchase orders, contracts, or letters of credit?
- Does code of conduct include specific language as to minimum labour standards as specified by the International Labor Organization (ILO), other intergovernmental organisations, or multi-stake holder initiatives?
Robust internal control process
- Are the internal controls established according to professionally recognised objective audit standards?
- Does the US importer have sufficient internal controls in place to effectively deter and detect instances of noncompliance with the code of conduct and other best practices?
- Does the US importer conduct periodic compliance audits using in-house personnel or external audit professionals?
- Does the US importer’s internal control process cover every level of the product supply chain including relevant business documents?
- Does the US importer have adequate corrective action plans to address noncompliance and deter weak business practices?
Earlier this month the US has issued a new import detention order on garments produced by the Hero Vast Group that are suspected of being manufactured using prison labour in China – a move that can result in the goods being seized, a criminal investigation of the importer, or the costly process of submitting proof to CBP that the merchandise was not produced with forced labour.
The Department of Commerce’s Bureau of Industry and Security (BIS) has also added textile and garment factories to its ‘Entity List,’ a blacklist of Chinese entities allegedly implicated in human rights abuses in Xinjiang – which now includes Changji Esquel Textile, Hetian Taida Apparel and Nanjing Synergy Textiles.
Investors have also been urged to take steps to identify, prevent and mitigate risks in portfolio companies to ensure they have no direct links to human rights abuses in China’s Xinjiang region.