Pandemic and war have upended American supply chains. The front-line regulators at Customs and Border Protection are warning the next shock may come from the U.S. campaign against human-rights abuses in China.
A law due to take effect June 21 will bar imported goods partly or wholly made in the Chinese manufacturing hub of Xinjiang — unless companies can prove the products have no ties to forced labor. Passed unanimously by Congress, and with strong support from unions and activists, it aims to make sure that there’s no place in the U.S. economy for merchandise made by workers in detention camps.
The U.S. government isn’t giving business much of a heads-up about how the measure will be enforced. At a Customs briefing on Wednesday, the message was essentially: Wait and see. That means nobody really knows how big a chunk of America’s $500 billion-plus in annual imports from China could get ensnared.
That question has been the subject of a concerted behind-the-scenes campaign by corporate lobbyists and internal debates within President Joe Biden’s administration — because there’s a huge amount riding on the answer.
For U.S. consumers facing decades-high inflation, stringent policing of the new law could mean another wave of shortages and price increases. Businesses such as Apple and Nike lobbied on the legislation last fall.
And for Biden, whose Democrats must defend slim majorities in November’s congressional elections, there’s danger in both directions. Maximal enforcement risks a fresh supply crunch — while soft-pedaling the measure would likely trigger charges that he’s weak on China.
If enforcing the law ends up disrupting the economy, advocates say, that’s a feature and not a bug — because only a credible threat to detain imported goods will force companies to rigorously police their supply chains.
Stepped-up scrutiny of imports under the law “will likely exacerbate current supply-chain disruptions,” Customs and Border Protection said in its latest budget request. They won’t be limited to goods coming from Xinjiang, or even China. All U.S. imports “will be subject to delays in processing time,” as officials scrutinize what they estimate will be an additional 11.5 million shipments a year, more than 10 times the previous figure.
Xinjiang, a province in northwest China, has long been a flash point in the escalating standoff between the world’s biggest economies. The U.S. accuses China of mass detentions and other forms of oppression that amount to a genocide, and says hundreds of thousands of detainees — mostly Uyghur Muslims or other minorities — have been forced to work against their will. Beijing denies the allegations, saying they’re part of a campaign to halt China’s economic rise.
Long before Congress passed the Uyghur Forced Labor Protection Act in December — since 1930, in fact — it’s been illegal to knowingly import goods made with forced or convict labor.
But the new measure marks a major change, because it effectively shifts the burden of proof from the government to importers themselves. They must now provide “clear and convincing evidence” that merchandise identified as suspect by the federal government, or manufactured even partially in Xinjiang, wasn’t produced with forced labor.
That amounts to guilty until proven innocent, business groups complain. Lobbyists for some of the biggest industry associations in Washington — from the National Retail Federation to Autos Drive America — have spent months campaigning against a hard-line approach, and urging a gradual phase-in of enforcement.
Some business groups sought — unsuccessfully — to persuade the administration to look the other way when products have only a small overlap with Xinjiang, and encouraged it to focus on high-priority areas identified by Congress, including cotton and tomatoes.
“For the administration to move on to much more complex, value-added goods and detain those goods at the border, that would cause even more supply-chain snarls,” said Ed Brzytwa, vice president of international trade at the Consumer Technology Association, which represents an industry that relies heavily on imports.
U.S. officials have identified a wide range of goods that touch on Xinjiang at some point during their journey along supply chains. They range from gloves and sneakers to auto parts and remote-controls for televisions.
The region is also the world’s top producer of polysilicon, a metal used in solar panels. That’s one reason why some of Biden’s climate advisers joined economic aides in seeking to narrow the scope of products under the legislation, according to people familiar with the internal discussions.
Business groups have asked Customs to specify what kind of proof is needed to free cargoes detained at U.S. ports. But that kind of detail has been hard to come by. It’s a striking contrast with the way the federal government typically implements new laws, a process that involves agencies proposing rules and inviting comment before finalizing them after months or even years of back-and-forth.
This time, initial written guidance to help importers prepare isn’t expected until June 8 or after — which many companies view as too late. Cargoes that could be subject to the measure are already en route to the United States. The government only plans to publish its broad implementation strategy, along with a list of manufacturers linked to forced labor, on June 21 — the day it will begin enforcing the law.
In a June 1 video briefing, Customs officials acknowledged the last-minute scramble — but rebuffed requests for more details now. Importers were advised to search the web for relevant official documents.
Customs has also written to some 2,000 companies warning that they’ve previously imported goods that are potentially subject to the law, but the letters didn’t identify which items were implicated.
