Forced Labor Researchers Say UFLPA Auto Parts Enforcement Could Increase

Duncan Jepson, whose Liberty Shared nongovernmental organization made the complaint that led to a withhold release order for Sime Darby's palm oil, said finding evidence to target goods in Xinjiang is harder than in Malaysia. "It’s difficult because people aren’t speaking as victims. There aren’t many victims able to report what is happening there. And, of course, there aren’t many NGOs. Those are two sources of information that are difficult to come by," he said in a phone interview with International Trade Today.

Irina Bukharin, a lead author of a C4ADS report on Xinjiang and mining, particularly gold mining, said most attention on forced labor has been in the agricultural and textile sectors. "I think too some of the testimonies of Uyghurs who have left the region have predominantly focused on agriculture," she said in a phone interview.

Textile companies are expected to be transparent because of that attention, and there are garment companies publishing their supplier lists. But, she said, the "industrial mineral sector has been left a little bit out of the spotlight. Companies only tend to publish their practices when associated with conflict minerals."

Bukharin said C4ADS (formerly called the Center for Advanced Defense Studies) chose to focus on minerals because researchers recognized "that natural resources make up a large portion of Xinjiang’s GDP."

Even though manufacturing outside the textile industry has been a more recent focus for researchers, Bukharin said, "I think there has in some sense been more attention paid to batteries because we do see this real drive for electric vehicles globally and this global desire for electric vehicles is creating a pressure point on this one specific element of the auto manufacturing industry.

"Batteries need specific minerals to do what they need to do and so some of those involve minerals that are more tightly tied to human rights and forced labor, both in China and elsewhere."

Jepson said the Sheffield Hallam researchers that brought attention to the auto industry with their "Driving Force" report (see 2212060054) may have just started by examining activity in Xinjiang rather than starting by looking at car part production in China. "It's early days for things like the engagement with the civil society community, looking at car parts," he said. More attention is going to electric vehicle production in China now, he said, and more NGOs are looking into the issue now. He said, "The question really is: How long is it going to be before a larger and larger part of civil society starts to look at the auto manufacturing sector? The question, perhaps, isn't: Is there something particularly special about car parts; the question is: Is the information flow going to be available to CBP?"

"Driving Force" described both structural parts forged in Xinjiang and transferred through Central Asia to Europe and coercive labor transfers to Eastern China, where car parts manufacturers make products such as wire harnesses and electronics.

Bukharin said she thinks companies find it more cost-effective to send parts to Europe overland by train. "There has been a lot of investment in the rail connections between China and Europe; it runs through Xinjiang," she said. She said autos assembled in Europe using Chinese parts have a higher risk of containing goods mined or made with forced labor than autos manufactured in North America. However, she said, it's difficult to track those inputs, as there are no public manifests or bills of lading with trains.

Both Jepson and Bukharin said uncovering forced labor of Turkic workers transferred to other provinces is challenging.

Jepson said that labor transfers of Muslim minority workers to Eastern China are very difficult to uncover. He said local Chinese newspapers stopped publishing stories about Uyghur workers arriving for poverty alleviation since the Uyghur Forced Labor Prevention Act was passed. He said it's possible there won't be an increase in detentions of auto parts if the paper trail for labor transfers to wire harness or electronics factories in Eastern China is no longer public.

"It’s entirely reasonable to think that it will change and be restricted but, there’s also every reason to believe that information will flow out," he said. "If I was in the car manufacturing industry, I wouldn’t be relying on the fact that the information flow [about coercive labor transfers] has kind of stemmed." He said what's happening in factories around the world is becoming more transparent -- and added, "increasingly, people want it that way."

Bukharin said, "Identifying transferred labor in other provinces or regions does pose a significant challenge." She added: "In some sense I certainly am sympathetic" to corporate complaints that they cannot trace goods' inputs back to raw materials. "This is not easy work -- tracing supply chains is not easy."

"There are more and more organizations producing data and developing tools to try to make it easier," she said. "It will be interesting to see how that evolves."

Jepson was less sympathetic, saying that if his 17-person NGO could uncover abuses in Malaysia, multinational corporations could do better than sending out questionnaires to vendors. "There's very little bench strength within corporations to think about their production of supply chains as potentially leading to penalties and punishments for human rights," he said.

"If your only method of finding information is asking the person below you in the supply chain," then you're not going to uncover Xinjiang inputs, he said. "To say, 'I asked, but they just said no' -- it’s absurd! If you want to find information, it’s there. There are clear signals, but you need to do more than webscraping." He said auditors need to be creative, talking to workers about where the shipments come from, or talking to retired workers.

A first-person testimony from a Uyghur forced laborer who worked in a factory making Milwaukee Tool gloves (see 2301120053) is an example of how a link to Uyghur forced labor could compromise an auto parts supplier if it happens in that sector, he said

"I’d be very surprised if there aren’t more actions against car part manufacturers pulling stuff in from Xinjiang."

Although C4ADS called out Ford and Tesla as companies that could be buying minerals mined in Xinjiang or processed by Xinjiang-headquartered firms (see 2310120053) Bukharin noted that because SEC conflict mineral filings don't say definitively that these firms are suppliers, "I think at this point I don’t have enough information to make a claim" that certain auto parts were made in part with Uyghur forced labor. "Likely the challenge is traceability; the risk is clearly present, but identifying specific auto parts is the challenge."

Moreover, Bukharin noted that even if you are buying from a processor headquartered in Xinjiang, if the processing is done outside the province, it's impossible to know if any of the gold was mined there.

"These companies are very much complicit in the human rights abuses. Given this, we would really strongly encourage not to source from these companies at large. Even if the direct material that they’re procuring isn’t linked to the human rights crisis," she said. She acknowledged that this is an "ethical argument rather than a legal argument."

While Bukharin said she thinks some auto parts that had Xinjiang labor are more likely to end up in Europe than America, some raw materials could end up anywhere in the world. "At this point, China is exporting a lot of its lithium globally," she said, "so I think at this point, it’s not easy to say that batteries from East Asia are necessarily more at risk to forced labor products than those produced elsewhere."