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April 1, 2022

Vietnam allegedly “laundering” Xinjiang cotton

US Customs & Border Protection is being urged to pay closer attention to cotton-based goods being imported from Vietnam after campaign groups alleged the country is importing Xinjiang cotton to help China bypass sanctions imposed as part of the Uyghur Forced Labor Prevention Act.

By Hannah Abdulla

The Alliance for Vietnam’s Democracy, which comprises several Vietnamese organisations, claims six out of 53 international intermediary manufacturers that have purchased unfinished cotton goods from five leading Chinese manufacturers sourcing Xinjiang cotton, are from Vietnam.

The Alliance for Vietnam’s Democracy cautioned that “several well-known international brands are supplied by those Vietnamese intermediaries and are thus at high risk of having Xinjiang cotton in their supply chains.”

The body – citing UN Comtrade data – says more than half of China’s exports of cotton semi-finished products are destined for countries within Asia, with Vietnam the second most popular destination. Analysis of shipping data suggests that, once there, international intermediary manufacturers produce finished garments from the semi-finished products for export around the world, often with the precise composition of the materials supplied by the suspect Chinese suppliers.

The effect is a “laundering” of Xinjiang cotton—obscuring its movement so the provenance of a finished garment’s cotton becomes difficult to detect.

According to Laura Murphy of the Helena Kennedy Centre for International Justice: “The benefits of such an export strategy may be clear: The end buyer is no longer directly involved in buying Xinjiang cotton — international brands and wholesalers can buy from factories in third countries that have few visible ties with Uyghur Region-based companies. A stable supply of Xinjiang cotton to the international market is thus guaranteed, even as brands, governments, and consumers increasingly turn away from Xinjiang forced-labour-made goods.

All five Chinese cotton enterprises that have been supplied by the Uyghur Region’s cotton industry, Jiangsu Lianfa Group, Luthai Textile Co., Huafu Fashion Co., Texhong Textile Group, and Weiqiao Textile Co., export a significant number of shipments of cotton goods to Vietnam for intermediary manufacturing. One company, Huafu, has production bases in the Xinjiang Uyghur Autonomous Region. Additionally, it has established production facilities in Vietnam. Both Luthai Textile Co. and Texhong Textile Group have also established production bases in Vietnam.

None of the above companies commented at time of press.

The Uyghur Forced Labor Prevention Act creates a rebuttable presumption that goods produced in whole or in part in the Xinjiang region are produced with forced labour and therefore prohibited from importation. The statement from the Alliance for Vietnam’s Democracy urges, in order to comply with this legislation, “the presumption should also be extended to cotton fabric imported from Vietnam, which, in turn, is importing cotton and other predecessors of finished apparel from Xinjiang.”

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