Esquel unit on Xinjiang Entity List forces closure of two factories - Just Style
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Esquel unit on Xinjiang Entity List forces closure of two factories

25 Oct 2021

Hong Kong's Esquel group has been forced to shut two factories in Mauritius as a result of the "irreparable" harms of one of its units being placed on the US Commerce Department’s “entity list” for activities in the Xinjiang Uyghur autonomous region.

Esquel unit on Xinjiang Entity List forces closure of two factories

In July Esquel sued the US government after it alleged it had been harmed by the placement of its subsidiary Changji Esquel Textile Co., on the US Entity List, a list of 11 Chinese entities allegedly implicated in human rights abuses in Xinjiang, three of which were textile and garment factories.

The Hong-Kong based textile and apparel manufacturer said the listing falsely implicated Changji Esquel in using forced labour in China’s Xinjiang region, a conclusion that “contradicts the facts, including audits by multiple world-class, third-party independent auditors using internationally recognised industry standards such as the SMETA standard, a widely respected social audit format”.

According to a report in the South China Morning Post, on Wednesday 6 October US District Judge Reggie B. Walton in Washington found that Esquel was not likely to succeed in its case against the department because it failed to show that Commerce had acted beyond its legal authority.

In an email to Just Style, a spokesperson for Esquel said it plans to appeal the decision and move forward with litigation.

“Esquel continues to suffer substantial, ongoing, and irreparable harms from the mistaken listing of Changji Esquel on the US Entity List. In the year following Changji Esquel’s erroneous listing, Esquel lost a significant portion of its annual revenue totalling hundreds of millions of dollars. This precipitous loss of business resulted in the closure of two factories in Mauritius and the loss of over 7,000 high-quality jobs globally.

“This ruling does not change the bottom line: no Esquel company has ever used, or will ever use, forced labour. We intend to move forward with litigation to seek an end to Changji Esquel’s mistaken listing.

“We will also continue to work in good faith outside of litigation with the Department of Commerce to satisfy the conditions set forth in the government’s unanimous 31 July vote to remove Changji Esquel. Our goal from the very beginning has been to correct the record and remove Changji Esquel from the Entity List, whether through voluntary action by the Department of Commerce or, if necessary, through litigation.”

In a statement at the end of August, Esquel said the US Department of Commerce and the group had been unable to reach a resolution “despite good faith efforts” because the US government “is unable to provide any concrete timeline by which it could finally remove CJE from the Entity List.”

“In the meantime, Esquel has suffered substantial, ongoing, and irreparable harms that have continued and even worsened in the last month. Specifically, US Customs and Border Protection (CBP) has detained and begun to exclude from entry a large number of shipments from Esquel’s factories outside of China, potentially forcing Esquel to miss commitments with customers and causing permanent economic and reputational damages. This heightens the need for emergency relief. Esquel is left with no choice but to resume its lawsuit.”