LDN - Business

U.S. readies bans on cotton, tomato imports from China's Xinjiang

[September 09, 2020] By David Lawder

WASHINGTON (Reuters) - U.S. Customs and Border Protection officials have prepared orders to block imports of cotton and tomato products from China's western region of Xinjiang over accusations of forced labor, though a formal announcement has been delayed.

A Trump administration announcement, initially expected on Tuesday, has been put off until later this week because of "scheduling issues," an agency spokesman said.

The cotton and tomato bans, and those on five other imports, over alleged Xinjiang forced-labor abuses, would be an unprecedented move by the agency, likely to stoke tension between the world's two largest economies.

The "Withhold Release Orders" let the agency detain shipments based on suspicion of forced-labor involvement under long-standing U.S. laws to combat human trafficking, child labor and other human rights abuses.

President Donald Trump's administration is ratcheting up pressure on China over its treatment of Uighur Muslims in Xinjiang, where the United Nations cites credible reports as saying 1 million Muslims held in camps have been put to work.

China denies mistreatment of the Uighurs and says the camps are vocational training centers needed to fight extremism.

In Beijing on Wednesday, a foreign ministry spokesman dismissed the orders as a pretext to target Chinese firms.

"I think the U.S. cares nothing about human rights," Zhao Lijian said in response to a query.

"It is only using this as a pretext to oppress Chinese companies, destabilize Xinjiang and slander China's Xinjiang policy," he told a daily news briefing.

China will take all necessary measures to safeguard its companies' legitimate rights and interests, he added.

CBP official Brenda Smith told Reuters the effective import bans would cover the entire supply chains for cotton, from yarn to textiles and apparel, as well as tomatoes, tomato paste and other regional exports.

"We have reasonable, but not conclusive, evidence that there is a risk of forced labor in supply chains related to cotton textiles and tomatoes coming out of Xinjiang," Smith, an executive assistant commissioner, said in an interview.

"We will continue to work our investigations to fill in those gaps."

U.S. law requires the agency to detain shipments in cases of forced labor accusations, such as those from non-government bodies, she said.

The bans could have far-reaching effects for U.S. retailers and apparel producers, as well as food manufacturers. China produces about a fifth of the world's cotton, most of it from Xinjiang. It is also the world's largest importer of the fibre, including from the United States.

The China Cotton Association, a trade body, declined to comment on Wednesday.

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Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019. REUTERS/Aly Song/File Photo

A Beijing-based cotton trader said the impact may be limited as China imports about 2 million tonnes a year each of cotton and cotton yarn, which may be enough to make textiles for the United States without Xinjiang cotton. Xinjiang's output is about 5 million tonnes.

"If Xinjiang cotton goes to the domestic industry and non-Western markets, the impact may be limited, it can probably still be digested," he said.

In the short term, it could also boost cotton imports by China, he added.

Cotton futures <CCFcv1> on the Zhengzhou Commodity Exchange fell 4.5% to 12,365 yuan ($1,804.90) per tonne on Wednesday, though the fall was largely driven by broader macroeconomic factors, said Zhang Lei, an analyst at Zhongyuan Futures.

Graphic - Top cotton producers, consumers, importers, exports & stockholders: https://fingfx.thomsonreuters.com/
gfx/ce/yzdpxxeqopx/
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'ABUSIVE WORKING AND LIVING CONDITIONS'

Legislation proposed by U.S. lawmakers in March would effectively assume that all goods produced in Xinjiang were made with forced labor and require certification they were not.

In a July advisory, Washington warned of "reputational, economic, and legal risks" to companies doing business in Xinjiang, or with entities using Xinjiang labor.

The State Department also said it sent a letter to top American firms, such as Walmart Inc <WMT.N>, Apple Inc <AAPL.O> and Amazon.com Inc <AMZN.O>, warning them over risks from supply chains linked with human rights abuses in Xinjiang.

In a draft announcement seen by Reuters, the CBP said it identified forced-labor indicators involving the cotton, textile and tomato supply chains, "including debt bondage, unfree movement, isolation, intimidation and threats, withholding of wages, and abusive working and living conditions."

The orders would block cotton from the Xinjiang Production and Construction Corps, and apparel from Yili Zhuowan Garment Manufacturing Co Ltd and Baoding LYSZD Trade and Business Co Ltd., which the agency says use prison labor from Chinese government administered "re-education" internment camps.

They would also block imports of items from the Lop County Industrial Park and the Lop County No. 4 Vocational Skills Education and Training Center, following the July 1 detention of products from Lop County Meixin Hair Product Co..

The CBP orders would also block imports of computer parts from Hefei Bitland Information Technology Co Ltd, based in Anhui province.

(Reporting by David Lawder; Additional reporting by Humeyra Pamuk, Dominique Patton and Cate Cadell; Editing by Michael Perry and Clarence Fernandez)

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