On April 1, 2021, Ashley Craig was quoted in the Financial Times on the supply chain issues and sanctions impacting western brands that are caught up in a battle the United States and its allies are waging with Beijing over its persecution of Uyghur Muslims.
According to the article, human rights activists are urging companies to take a stand over the repression of Uyghurs, which the United States this week formally declared was “genocide.” Meanwhile, the U.S. Congress is considering legislation that would force companies to ensure their supply chains use no forced labor from Xinjiang. While apparel companies face particular pressure because Xinjiang is the dominant source of Chinese cotton, concerns extend to other sectors where the region is a critical supplier, such as polysilicon used to make solar panels.
In addition to supply chain challenges, Craig said companies were grappling with sanctions that the Trump administration imposed on the Xinjiang Production and Construction Corp, a paramilitary group involved in using forced labor in cotton production. “There is a complicated calculation of risk being conducted by sectors subject to, or on the periphery of, U.S. sanctions,” said Craig, adding that unwinding supply chains at the speed urged by the government was hard.
The Trump administration also issued “withhold release orders” that require U.S. Customs and Border Protection to block imports of cotton and tomatoes that use forced labor from Xinjiang. But companies have raised concerns about not receiving adequate guidance from the U.S. government about complying with the restrictions.
Craig said that beyond the other challenges, China had a new statute that lets Chinese companies sue foreign companies with business in China that comply with U.S. sanctions. “It’s kind of a perfect storm,” he said.