The Trade Talks Podcast interviewed Amy Lehr of CSIS on issues of forced labor in Xinjiang and U.S. trade restrictions imposed in response (starts at 17:42 of the interview):
Chad Bown: So, what are foreign governments and the United States doing about this?
Amy Lehr: Governments are definitely increasingly beginning to make public statements about the situation or take some kind of steps. The U.S. has definitely been out in front. The U.S. has sanctioned a number of entities related to their involvement in human rights abuses in Xinjiang or their involvement in forced labor there. They’ve put a number of technology companies on what’s called the entities list, which limits the ability of U.S. companies to export to the companies on the entities list. So those are companies involved in things like facial recognition and artificial intelligence, which are being used for surveillance in the region. The Congress has passed some legislation related to the situation in Xinjiang. And there’s some really aggressive legislation that was just passed almost unanimously by the House of Representatives, that would basically name the entire region as being affected by forced labor. U.S. law provides for the seizure of goods produced with forced labor, if they are exported to the U.S., and so anything from the region, even if it was just an input into a product could be seized. In the meantime, the Customs and Border Protection have issued a series of what are called WROs, or withhold release orders, where they’ve detained shipments from Xinjiang that are suspected of having been produced with forced labor. So there’s a lot of action on the U.S. side. I would say, other countries have not done a lot. I think a lot of them are, they know that, you know, to the extent countries have spoken out, they have faced really aggressive retribution from China, and so they have been really slow to act on this particular issue despite its scale and severity.
Soumaya Keynes: My understanding of the way that these enforcement actions work is, the US Customs authorities can stop a shipment from entering the U.S., but then that shipment can just go somewhere else. And I suppose that the question that invites is, is how effective these measures can really be, if they’re only done unilaterally without other countries. So really do you need other countries saying, no you can’t ship that stuff here either.
Amy Lehr: The U.S. has taken a number of actions on Xinjiang, but it really can’t accomplish its policy objectives alone. The problem’s too big. China’s policy positions and goals are entrenched. And when you think about global supply chains, the U.S. is obviously a really, really important economy, but it’s not enough on its own, partly because China’s internal market is massive. So when we look at, again the example of apparel and textiles, 88% of China’s apparel and textiles that it produces are actually consumed within China. So you’re trying to affect the calculus of China for things like import bans, but it’s actually, your only, you only have a small percentage of the production to actually try to affect, if that makes sense. And so it’s quite challenging and if you want to use both economic and diplomatic measures to have an impact, it’s going to be really important that Europe gets on board, Canada, Australia. I mean, ideally, also some of the Muslim majority world, although so far that hasn’t looked very promising, but this is too big a problem for even the U.S. to address it on its own.
Chad Bown: So with these import bans, and these actions the U.S. government is taking, is there a risk that they might be too broad, that they might actually catch up things that aren’t being produced with forced labor.
Amy Lehr: Right now, the U.S. is issuing individual withhold release orders on particular shipments regarding particular companies, and so they’re issuing those because they’ve had information brought to them, or they’ve identified it, that indicates that those shipments are actually affected by forced labor. If you had an assumption made by the regulatory authorities, or by Congress, that all the products from Xinjiang were affected by forced labor, then yes, you would potentially capture and seize goods that might not have been produced with forced labor. I think what the proponents of those approaches would say is that, there’s no way to know, we know there’s a significant problem there and there’s no way to know that those products were not produced with forced labor, and frankly it’s a problem that China can fix quite easily by starting to let people back in their region and letting up on its surveillance practices a bit.