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U.S. to Press China to Stop Flow of Fentanyl

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President Biden pressed the Chinese leader Xi Jinping on Wednesday to crack down on the Chinese firms that are helping to produce fentanyl, a potent drug that has killed hundreds of thousands of Americans.A plan to curb China’s illicit exports of fentanyl and, particularly, the chemicals that can be combined to make the drug was hoped to be one of the more significant achievements for the United States out of Mr. Biden and Mr. Xi’s meeting, which took place as leaders from Pacific nations gathered for an international conference in San Francisco.A summary of the meeting published by China’s CCTV News said that Mr. Biden and Mr. Xi had agreed to establish an anti-drug working group.China is home to a thriving chemical industry that pumps out compounds that are made into pharmaceuticals, fragrances, textile dyes and fertilizers. Some of those same compounds can also be combined to create fentanyl, an opioid that can be 100 times as potent as morphine.U.S. officials argue that this vast chemical industry is playing a key role in the American fentanyl crisis by supplying the bulk of materials used in illegal drug labs, including in Mexico, which is now the largest exporter of fentanyl to the United States.The Chinese government denies that its country plays such a pivotal role and instead blames the United States for harboring a culture of drug use.“All-out marketing by pharmaceutical companies, over-prescription by doctors, ineffective government crackdowns and the negative implications of marijuana legalization are among the combination of factors behind an ever-growing market for narcotics,” China’s foreign ministry said in a statement last year.U.S. officials say they have stopped more fentanyl from coming into the United States in the past two years than in the previous five years combined. According to the Centers for Disease Control and Prevention, fentanyl and other synthetic opioids may have resulted in more than 77,000 overdose deaths in the United States between May 2022 and April 2023. The problem with fentanyl overdoses is particularly acute in San Francisco, where Mr. Biden and Mr. Xi are meeting.Ian Johnson, a senior fellow for China studies at the Council on Foreign Relations, said that getting China to agree to do something about fentanyl would resonate more with average Americans than the typical “deliverables” from international meetings.“For Biden, that would be nice to have to show to the heartland of the United States that relations with China are more than just some esoteric matter, but can actually bring something to ordinary people,” Mr. Johnson said in a briefing held by the council last week. Republicans have made fentanyl-related deaths a central piece of their campaign against Mr. Biden and Democrats in the 2024 elections.Red stained pollen grain sample at the U.S. Customs and Border Protection in Chicago, last year.Lyndon French for The New York TimesCollecting pollen samples at a Customs and Border Protection facility. The extent to which an agreement with China would curb the flow of fentanyl into the United States is unclear.Lyndon French for The New York TimesStill, given the difficulties with policing an illicit industry, the extent to which an agreement would curb the flow of fentanyl into the United States is unclear.Roselyn Hsueh, an associate professor of political science at Temple University, said that an agreement between Mr. Biden and Mr. Xi could lead the Chinese central government to provide more oversight and invest more resources into inspection and monitoring. But she said Beijing had run into difficulty in the past clamping down on fentanyl and precursor chemicals.Before 2019, China was the primary source of fentanyl coming into the United States, typically through the mail and other commercial couriers. As a part of trade talks with President Donald J. Trump, the Chinese government in 2019 agreed to prohibit the production, sale and export of all fentanyl-related drugs except through special licenses.But that resulted in Chinese companies rerouting to Mexico and India’s emergence as a new production site, Ms. Hsueh said. The main source of U.S. fentanyl became Mexican criminal organizations, which used Chinese-made components and Chinese money-laundering services.Today, online sales that mask the identities of sellers and buyers further complicate enforcement. The regulation and enforcement of fentanyl and precursor chemicals remain “fragmented and decentralized” among Chinese local governments, industry associations and firms with vested interests in the chemical trade, Ms. Hsueh said.U.S. officials have said that problem is compounded because many of the ingredients used to make fentanyl are legal chemicals that can be used for legitimate purposes in other industries. The United States has issued sanctions against dozens of people in China and Hong Kong for their role in fentanyl trafficking. In September, Mr. Biden added China to the U.S. list of the world’s major drug-producing countries, a move that the Chinese government denounced as “a malicious smear.”Last month, the U.S. customs department released an updated strategy to combat fentanyl and synthetic drugs, including through the enhanced use of data and counterintelligence operations to track drug manufacturing and distribution networks, and target suspicious locations and recipients that demonstrate patterns of illicit activity. “In my 30 years as a customs official, the trafficking of synthetic illicit drugs like fentanyl is one of the toughest, most daunting challenges I have ever seen,” said Troy Miller, the acting commissioner for Customs and Border Protection.U.S. officials say they have stopped more fentanyl from coming into the United States in the past two years than in the previous five years combined.Mamta Popat/Arizona Daily Star, via Associated PressU.S. officials believe China’s dominance as a chemical producer makes Beijing’s cooperation key for enforcement. Administration officials, including Commerce Secretary Gina M. Raimondo, have raised the issue with top Chinese officials during recent trips to China.When six lawmakers, including Senator Chuck Schumer, the majority leader, had a chance to talk to Mr. Xi during a visit to China last month, the main issue they brought up was not trade or military coordination or climate change, but the harm that fentanyl had caused in their home states.“Everyone told stories, personal stories about how, you know, friends of ours, family, have died from fentanyl, and how this was a really important issue, and I think that you could tell that made an impression on him, how deeply we felt about it,” said Mr. Schumer, a New York Democrat.Fentanyl precursors from China have become a bipartisan issue in Congress, and the six senators who spoke with Mr. Xi were three Democrats and three Republicans.“China needs to enforce laws that prevent the export of fentanyl precursors to international drug markets,” said Senator Bill Cassidy, Republican of Louisiana.Despite the scale of the problem, there is hope that greater coordination between the United States and China could improve the situation. Cooperation between the countries on preventing shipments of the precursor chemicals stalled several years ago after the United States placed sanctions on a Chinese government entity for its alleged involvement in human rights abuses in China’s westernmost region, Xinjiang.That entity was located at the same address in Beijing as the National Narcotics Laboratory of China, which plays a key role in China’s law enforcement effort on drug-related chemicals.Chinese officials deeply resent American sanctions on their institutions, and U.S. officials have taken the position that because of the risk of confusion among the two institutes at the same address, neither institute can work with the United States.China then broadened its position in August 2022 when it halted any counternarcotics coordination with the United States as one of a series of measures taken in response to a visit to Taiwan by Representative Nancy Pelosi, then the speaker of the House. Beijing claims Taiwan, a self-ruled island democracy, as part of its territory.Eileen Sullivan More

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    How AI and DNA Are Unlocking the Mysteries of Global Supply Chains

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    At a cotton gin in the San Joaquin Valley, in California, a boxy machine helps to spray a fine mist containing billions of molecules of DNA onto freshly cleaned Pima cotton.That DNA will act as a kind of minuscule bar code, nestling amid the puffy fibers as they are shuttled to factories in India. There, the cotton will be spun into yarn and woven into bedsheets, before landing on the shelves of Costco stores in the United States. At any time, Costco can test for the DNA’s presence to ensure that its American-grown cotton hasn’t been replaced with cheaper materials — like cotton from the Xinjiang region of China, which is banned in the United States because of its ties to forced labor.Amid growing concern about opacity and abuses in global supply chains, companies and government officials are increasingly turning to technologies like DNA tracking, artificial intelligence and blockchains to try to trace raw materials from the source to the store.Companies in the United States are now subject to new rules that require firms to prove their goods are made without forced labor, or face having them seized at the border. U.S. customs officials said in March that they had already detained nearly a billion dollars’ worth of shipments coming into the United States that were suspected of having some ties to Xinjiang. Products from the region have been banned since last June.Customers are also demanding proof that expensive, high-end products — like conflict-free diamonds, organic cotton, sushi-grade tuna or Manuka honey — are genuine, and produced in ethically and environmentally sustainable ways.That has forced a new reality on companies that have long relied on a tangle of global factories to source their goods. More than ever before, companies must be able to explain where their products really come from.A technician at Applied DNA Sciences testing samples to trace the raw materials.Johnny Milano for The New York TimesCotton samples that are being processed at the lab.Johnny Milano for The New York TimesThe task may seem straightforward, but it can be surprisingly tricky. That’s because the international supply chains that companies have built in recent decades to cut costs and diversify their product offerings have grown astonishingly complex. Since 2000, the value of intermediate goods used to make products that are traded internationally has tripled, driven partly by China’s booming factories.A large, multinational company may buy parts, materials or services from thousands of suppliers around the world. One of the largest such companies, Procter & Gamble, which owns brands like Tide, Crest and Pampers, has nearly 50,000 direct suppliers. Each of those suppliers may, in turn, rely on hundreds of other companies for the parts used to make its product — and so on, for many levels up the supply chain.To make a pair of jeans, for example, various companies must farm and clean cotton, spin it into thread, dye it, weave it into fabric, cut the fabric into patterns and stitch the jeans together. Other webs of companies mine, smelt or process the brass, nickel or aluminum that is crafted into the zipper, or make the chemicals that are used to manufacture synthetic indigo dye.“Supply chains are like a bowl of spaghetti,” said James McGregor, the chairman of the greater China region for APCO Worldwide, an advisory firm. “They get mixed all over. You don’t know where that stuff comes from.”Harvesting cotton in Xinjiang. Cotton from the region in China is banned in the United States because of its ties to forced labor.Getty ImagesGiven these challenges, some companies are turning to alternative methods, not all proven, to try to inspect their supply chains.Some companies — like the one that sprays the DNA mist onto cotton, Applied DNA Sciences — are using scientific processes to tag or test a physical attribute of the good itself, to figure out where it has traveled on its path from factories to consumer.Applied DNA has used its synthetic DNA tags, each just a billionth of the size of a grain of sugar, to track microcircuits produced for the Department of Defense, trace cannabis supply chains to ensure the product’s purity and even to mist robbers in Sweden who attempted to steal cash from A.T.M.s, leading to multiple arrests.MeiLin Wan, the vice president for textiles at Applied DNA, said the new regulations were creating a “tipping point for real transparency.”“There definitely is a lot more interest,” she added.The cotton industry was one of the earliest adopters of tracing technologies, in part because of previous transgressions. In the mid-2010s, Target, Walmart and Bed Bath & Beyond faced expensive product recalls or lawsuits after the “Egyptian cotton” sheets they sold turned out to have been made with cotton from elsewhere. A New York Times investigation last year documented that the “organic cotton” industry was also rife with fraud.In addition to the DNA mist it applies as a marker, Applied DNA can figure out where cotton comes from by sequencing the DNA of the cotton itself, or analyzing its isotopes, which are variations in the carbon, oxygen and hydrogen atoms in the cotton. Differences in rainfall, latitude, temperature and soil conditions mean these atoms vary slightly across regions of the world, allowing researchers to map where the cotton in a pair of socks or bath towel has come from.Other companies are turning to digital technology to map supply chains, by creating and analyzing complex databases of corporate ownership and trade.Farmers in India auction their cotton.Saumya Khandelwal for The New York TimesSome firms, for example, are using blockchain technology to create a digital token for every product that a factory produces. As that product — a can of caviar, say, or a batch of coffee — moves through the supply chain, its digital twin gets encoded with information about how it has been transported and processed, providing a transparent log for companies and consumers.Other companies are using databases or artificial intelligence to comb through vast supplier networks for distant links to banned entities, or to detect unusual trade patterns that indicate fraud — investigations that could take years to carry out without computing power.Sayari, a corporate risk intelligence provider that has developed a platform combining data from billions of public records issued globally, is one of those companies. The service is now used by U.S. customs agents as well as private companies. On a recent Tuesday, Jessica Abell, the vice president of solutions at Sayari, ran the supplier list of a major U.S. retailer through the platform and watched as dozens of tiny red flags appeared next to the names of distant companies.“We’re flagging not only the Chinese companies that are in Xinjiang, but then we’re also automatically exploring their commercial networks and flagging the companies that are directly connected to it,” Ms. Abell said. It is up to the companies to decide what, if anything, to do about their exposure.Studies have found that most companies have surprisingly little visibility into the upper reaches of their supply chains, because they lack either the resources or the incentives to investigate. In a 2022 survey by McKinsey & Company, 45 percent of respondents said they had no visibility at all into their supply chain beyond their immediate suppliers.But staying in the dark is no longer feasible for companies, particularly those in the United States, after the congressionally imposed ban on importing products from Xinjiang — where 100,000 ethnic minorities are presumed by the U.S. government to be working in conditions of forced labor — went into effect last year.Uyghur workers at a garment factory in the Xinjiang region of China in 2019.Gilles Sabrie for The New York TimesXinjiang’s links to certain products are already well known. Experts have estimated that roughly one in five cotton garments sold globally contains cotton or yarn from Xinjiang. The region is also responsible for more than 40 percent of the world’s polysilicon, which is used in solar panels, and a quarter of its tomato paste.But other industries, like cars, vinyl flooring and aluminum, also appear to have connections to suppliers in the region and are coming under more scrutiny from regulators.Having a full picture of their supply chains can offer companies other benefits, like helping them recall faulty products or reduce costs. The information is increasingly needed to estimate how much carbon dioxide is actually emitted in the production of a good, or to satisfy other government rules that require products to be sourced from particular places — such as the Biden administration’s new rules on electric vehicle tax credits.Executives at these technology companies say they envision a future, perhaps within the next decade, in which most supply chains are fully traceable, an outgrowth of both tougher government regulations and the wider adoption of technologies.“It’s eminently doable,” said Leonardo Bonanni, the chief executive of Sourcemap, which has helped companies like the chocolate maker Mars map out their supply chains. “If you want access to the U.S. market for your goods, it’s a small price to pay, frankly.”Others express skepticism about the limitations of these technologies, including their cost. While Applied DNA’s technology, for example, adds only 5 to 7 cents to the price of a finished piece of apparel, that may be significant for retailers competing on thin margins.And some express concerns about accuracy, including, for example, databases that may flag companies incorrectly. Investigators still need to be on the ground locally, they say, speaking with workers and remaining alert for signs of forced or child labor that may not show up in digital records.Justin Dillon, the chief executive of FRDM, a nonprofit organization dedicated to ending forced labor, said there was “a lot of angst, a lot of confusion” among companies trying to satisfy the government’s new requirements.Importers are “looking for boxes to check,” he said. “And transparency in supply chains is as much an art as it is a science. It’s kind of never done.” More

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    Global Car Supply Chains Entangled With Abuses in Xinjiang, Report Says

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    A new report on the auto industry cites extensive links to Xinjiang, where the U.S. government now presumes goods are made with forced labor.The global auto industry remains heavily exposed to the Xinjiang region of China for raw materials, components and other supplies, a new report has found, despite a recent U.S. law intended to restrict purchases from the area, where the Chinese government has committed human rights abuses against mostly Muslim minorities.The report, from a team of researchers led by Laura T. Murphy, a professor of human rights and contemporary slavery at Britain’s Sheffield Hallam University, details the links between Chinese companies with deep ties to Xinjiang and the automakers that use their supplies, such as metals, batteries, wiring and wheels.The report identifies major Chinese companies that the researchers determined have participated in coercive labor programs in Xinjiang, or have recently sourced their materials and products from the region, where China has engaged in mass internment of Uyghurs and other minorities. Those Chinese firms are major participants in the global supply chain for auto parts, the report says, raising the likelihood that automakers like Volkswagen, Honda, Ford Motor, General Motors, Mercedes-Benz Group, Toyota and Tesla have sold cars containing raw materials or components that have at some point touched Xinjiang.“There was no part of the car we researched that was untainted by Uyghur forced labor,” Dr. Murphy said. “It’s an industrywide problem.”Such links could pose serious problems for the international auto brands. The Biden administration, like the Trump administration before it, has taken an increasingly aggressive posture toward Chinese trade violations and imports of goods made with forced labor, which the United Nations estimates affects 28 million people worldwide.Under the Uyghur Forced Labor Prevention Act, products made wholly or partly in Xinjiang are now assumed to have been produced with forced labor, making them vulnerable to seizure by the federal government if they are brought into the United States. Customs officials say that since the law went into effect in June, they have stopped roughly 2,200 shipments — valued at more than $728 million — that were suspected of having Xinjiang content. More than 300 of those products were ultimately released into the United States.Federal officials did not disclose what kinds of products have been seized. But the new rules have been particularly disruptive for companies making clothing and solar panels, which source raw materials like cotton and polysilicon from Xinjiang.The New York Times has not independently verified the entire contents of the new report, which names roughly 200 companies, both Chinese and international, with potential direct or indirect links to Xinjiang. Many of the Chinese industrial giants named in the report have multiple production sites, meaning they could be supplying international automakers with metal, electronics or wheels made from their factories outside Xinjiang.The global supply chain for auto parts is vast and complex. According to estimates by McKinsey and Company, the average automotive manufacturer may have links to as many as 18,000 suppliers in its full supply chain, from raw materials to components.Many of those suppliers run through China, which has become increasingly vital to the global auto industry and the United States, the destination for about a quarter of the auto parts that China exports annually. Xinjiang is home to a variety of industries, but its ample coal reserves and lax environmental regulations have made it a prominent location for energy-intensive materials processing, like smelting metal, the report says.Chinese supply chains are complicated and opaque, which can make it difficult to trace certain individual products from Xinjiang to the United States. Over the past three years, Xinjiang and other parts of China have been intermittently locked down to keep the coronavirus at bay. Even before the pandemic, the Chinese government tightly controlled access to Xinjiang, especially for human rights groups and media outlets.Determining the extent of coercion that any individual Uyghur worker may face in Xinjiang’s mines or factories is also difficult given the region’s restrictions. But the overarching environment of repression in Xinjiang has prompted the U.S. government to presume that any products that have touched the region in their production are made with forced labor unless companies can prove otherwise.Workers in the region “don’t have a chance to say no,” said Yalkun Uluyol, a Xinjiang native and one of the report’s authors. Goods coming from Xinjiang “are a product of the exploitation of the land, of the resources and of the people,” he said.The report’s researchers identified numerous documents — including Chinese-language corporate filings, government announcements and ocean import records — indicating that international brands, at the very least, have multiple potential exposures to programs in Xinjiang that the U.S. government now defines as forced labor.Dr. Murphy said her team had identified nearly 100 Chinese companies mining, processing or manufacturing materials for the automotive industry operating in the Uyghur region, at least 38 of which had publicized their engagement in repressive state-sponsored labor programs through their social media accounts, corporate reports or other channels.International automakers contacted by The Times did not contradict the report but said they were committed to policing their supply chains against human rights abuses and forced labor.G.M., Volkswagen and Mercedes said their supplier codes of conduct prohibited forced labor. Honda said its suppliers were required to follow global sustainability guidelines. Ford said it maintained processes to ensure that its global operations, including in China, complied with all relevant laws and regulations.Toyota, in a statement, said, “We expect our business partners and suppliers to follow our lead to respect and not infringe upon human rights.”Tesla did not respond to repeated requests for comment.The Chinese government has insisted that there are no human rights violations in Xinjiang, and has called accusations of forced labor in Xinjiang “the lie of the century.”“‘Forced labor’ in Xinjiang is a lie deliberately made up and spread by the U.S. to shut China out of the global supply and industrial chains,” Liu Pengyu, the spokesman at the Chinese Embassy in Washington, said in a statement.Some of the Chinese companies named in the report are enormous industry suppliers that have proudly advertised their role in carrying out the Chinese government’s policies toward Uyghurs in social media postings, or in glossy annual reports.They include China Baowu Steel Group, the world’s largest steel maker, which has a subsidiary in Xinjiang that accounts for at least 9 percent of its total steel production, according to the report. Baowu and its subsidiaries make springs for car suspension systems, axles and body panels, as well as various kinds of steel that feed the supply chains of most international carmakers.In its 2020 corporate social responsibility report, which pledges adherence to China’s leader and the Communist Party, Baowu Group said that its subsidiary had “fully implemented the party’s ethnic policy” and that 364 laborers from poor families from villages in southern Xinjiang had “been arranged with employment.” Human rights advocates say the terms are euphemisms for organized mass transfers of Uyghur laborers into factories.According to the report, Baowu Group subsidiaries have participated in other transfers of workers from poor regions of Xinjiang, and in so-called poverty alleviation programs, which the United States now recognizes as a guise for forced labor. Under the new law, companies that participate in such programs can be added to a blacklist that blocks the products they make anywhere — even outside Xinjiang — from coming to the United States.The new report also builds on a June investigation published by The Times into Xinjiang’s role in producing electric vehicle battery minerals like lithium and nickel, as well as previous research by a firm called Horizon Advisory into the aluminum industry in Xinjiang. The report identifies recent transfers of Uyghur laborers at some of the world’s biggest aluminum companies, and traces these products to major auto industry suppliers, some of whom made shipments to the United States, Canada or Europe as recently as November, shipping records show.It also documents ties to Xinjiang and transfers of Uyghur workers for dozens of other significant auto industry suppliers, such as Double Coin, a tire maker that sells widely in the United States, including online at Walmart and Amazon.And it documents a recent investment by CATL — a Chinese firm that produces roughly a third of the world’s electric vehicle batteries and supplies Tesla, Ford, G.M., Volkswagen and other brands — in a major new lithium processing company in Xinjiang.Zhang Yizhi, a spokesman for CATL, said the company was a minority shareholder in the Xinjiang company and was not involved in its operations or management. CATL is committed to building a responsible supply chain and strictly opposes and prohibits any form of forced labor in its suppliers, he said.Baowu Group, Double Coin and its parent, Shanghai Huayi Group, did not respond to repeated requests for comment. Amazon declined to comment about its sale of Double Coin tires, while Walmart did not respond.The research suggests that the United States still has far to go in stopping the flow of goods linked to Xinjiang. Customs officials say they are working to enforce a ban on such products, but they are still hiring aggressively and working to build out the department’s capacity to identify and stop these goods.“We’re still in an upward trajectory,” said AnnMarie R. Highsmith, the executive assistant commissioner of the Office of Trade at Customs and Border Protection, in an interview in October.“Unfortunately,” she added, “the situation globally is such that we are going to have full employment for a while.” More

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    U.S. Blocks Dominican Republic Sugar Imports, Citing Forced Labor

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    An import ban targets sugar from Central Romana Corporation, a behemoth whose sugar is sold under the Domino brand.WASHINGTON — The Biden administration announced Wednesday that it would block shipments of sugar from Central Romana Corporation, a Dominican Republic company that produces sugar sold in the United States under the Domino brand and that has long faced allegations of subjecting its workers to poor labor conditions.U.S. Customs and Border Protection issued what is known as a withhold release order against the company “based on information that reasonably indicates the use of forced labor in its operations,” including abusive working and living conditions, excessive overtime, withheld wages and other violations.“Manufacturers like Central Romana, who fail to abide by our laws, will face consequences as we root out these inhumane practices from U.S. supply chains,” AnnMarie R. Highsmith, the executive assistant commissioner of the agency’s Office of Trade, said in a statement.Central Romana responded that it was “very disappointed” by the decision and that it had been investing significantly for years to improve the living conditions of its employees.“We disagree vehemently with the decision as we do not believe it reflects the facts about our company and the treatment of our employees,” it said in a statement on Wednesday.Central Romana, which is the largest landholder and employer in the Dominican Republic, exports more than 200 million pounds of sugar to the United States each year. It is owned partly by the Fanjul family, an influential force in U.S. politics for decades as key donors to both Republicans and Democrats.The measures have been the subject of an intense debate on Capitol Hill, where profits from the sugar industry are funneled into generous campaign contributions and lobbying expenditures, according to people familiar with the discussions who spoke on the condition of anonymity.The United States is the most important market for Dominican sugar, and the move could have a crippling effect on Central Romana, which alone produces roughly 59 percent of the Dominican Republic’s sugar, according to the U.S. Department of Agriculture.It could also cause significant disruptions to U.S. sugar imports in the near term, though economists said the impact on sugar prices, which are heavily influenced by regulation, remained to be seen. Those regulations include price supports that keep U.S. sugar prices far above those on world markets, as well as preferential tariff rates for sugar imported from the Dominican Republic.Charity Ryerson, the executive director at Corporate Accountability Lab, a Chicago-based human rights organization, said the restrictions would be a powerful impetus for Central Romana to improve conditions for its workers.“Central Romana has been on notice for years but has failed to comply with even the most basic of labor and human rights standards in their operation,” she said. “From this moment forward, we have a really significant opportunity for C.B.P., for Central Romana and civil society to work together to ensure that workers are free, they’re treated fairly and that forced labor never happens on these farms again.”The Dominican sugar industry has been the subject of scrutiny for decades for its poor labor practices. Media reports and human rights groups have said Central Romana exerts tremendous power over its workers, many of whom are Haitian migrants and some of whom lack citizenship.Many workers live in dilapidated housing without running water and electricity, according to civil society groups. The company has also been accused of forcibly evicting families from their homes in the Dominican Republic, and employing a force of masked and armed guards that intimidate workers.Central Romana has publicly defended its practices and has said it offers among the best working conditions in the industry. A congressional delegation that visited the Dominican Republic and met with workers this summer said the country had made progress toward addressing some of the worst abuses, including child labor and human trafficking.But the delegation still found evidence that forced labor was persisting on the sugar cane farms. Sugar cane cutters faced “arduous working and living conditions” and “a culture of fear appears to permeate the industry,” Representatives Earl Blumenauer of Oregon and Dan Kildee of Michigan, both Democrats, said in a statement.Members of the Fanjul family, Cuban exiles who started sugar cane farms in Florida and acquired the Dominican Republic company in the 1980s, have been a powerful force in American politics for decades, known for relationships with the Bush family, the Clintons and Senator Marco Rubio, Republican of Florida, among others.They are part owners of American Sugar Refining, the world’s largest sugar refinery, which processes sugar from the Dominican Republic at its U.S. facilities and sells to companies including Hershey. More

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    Companies Brace for Impact of New Forced Labor Law

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    Billions of dollars could be at stake as a law banning imports of products from China goes into effect.WASHINGTON — A sweeping new law aimed at cracking down on Chinese forced labor could have significant — and unanticipated — ramifications for American companies and consumers.The law, which went into effect on Tuesday, bars products from entering the United States if they have any links to Xinjiang, the far-western region where the Chinese authorities have carried out an extensive crackdown on Uyghur Muslims and other ethnic minorities.That could affect a wide range of products, including those using any raw materials from Xinjiang or with a connection to the type of Chinese labor and poverty alleviation programs the U.S. government has deemed coercive — even if the finished product used just a tiny amount of material from Xinjiang somewhere along its journey.The law presumes that all of these goods are made with forced labor, and stops them at the U.S. border, until importers can produce evidence that their supply chains do not touch on Xinjiang, or involve slavery or coercive practices.Evan Smith, the chief executive at the supply chain technology company Altana AI, said his company calculated that roughly a million companies globally would be subject to enforcement action under the full letter of the law, out of about 10 million businesses worldwide that are buying, selling or manufacturing physical things.“This is not like a ‘picking needles out of a haystack’ problem,” he said. “This is touching a meaningful percentage of all of the world’s everyday goods.”The Biden administration has said it intends to fully enforce the law, which could lead the U.S. authorities to detain or turn away a significant number of imported products. Such a scenario is likely to cause headaches for companies and sow further supply chain disruptions. It could also fuel inflation, which is already running at a four-decade high, if companies are forced to seek out more expensive alternatives or consumers start to compete for scarce products.Understand the Supply Chain CrisisThe Origins of the Crisis: The pandemic created worldwide economic turmoil. We broke down how it happened.Explaining the Shortages: Why is this happening? When will it end? Here are some answers to your questions.Lessons From History: Henry Ford believed short-term interests must not squeeze out investment in a business’ resilience. His management philosophy yields powerful insights about the current crisis.A Key Factor in Inflation: In the U.S., inflation is hitting its highest level in decades. Supply chain issues play a big role.Failure to fully enforce the law is likely to prompt an outcry from Congress, which is in charge of oversight.“The public is not prepared for what’s going to happen,” said Alan Bersin, a former commissioner of U.S. Customs and Border Protection who is now the executive chairman at Altana AI. “The impact of this on the global economy, and on the U.S. economy, is measured in the many billions of dollars, not in the millions of dollars.”Ties between Xinjiang and a few industries, like apparel and solar, are already well recognized. The apparel industry has scrambled to find new suppliers, and solar firms have had to pause many U.S. projects while they investigated their supply chains. But trade experts say the connections between the region and global supply chains are far more expansive than just those industries.According to Kharon, a data and analytics firm, Xinjiang produces more than 40 percent of the world’s polysilicon, a quarter of the world’s tomato paste and a fifth of global cotton. It’s also responsible for 15 percent of the world’s hops and about a tenth of global walnuts, peppers and rayon. It has 9 percent of the world’s reserves of beryllium, and is home to China’s largest wind turbine manufacturer, which is responsible for 13 percent of global output.Direct exports to the United States from the Xinjiang region — where the Chinese authorities have detained more than a million ethnic minorities and sent many more into government-organized labor transfer programs — have fallen off drastically in the past few years. But a wide range of raw materials and components currently find their way into factories in China or in other countries, and then to the United States, trade experts say.In a statement on Tuesday, Gina Raimondo, the secretary of commerce, called the passage of the law “a clear message to China and the rest of the global community that the U.S. will take decisive actions against entities that participate in the abhorrent use of forced labor.”The Chinese government disputes the presence of forced labor in Xinjiang, saying that all employment is voluntary. And it has tried to blunt the impact of foreign pressure to stop abuses in Xinjiang by passing its own anti-sanctions law, which prohibits any company or individual from helping to enforce foreign measures that are seen as discriminating against China.Though the implications of the U.S. law remain to be seen, it could end up transforming global supply chains. Some companies, for example in apparel, have been quickly severing ties to Xinjiang. Apparel makers have been scrambling to develop other sources of organic cotton, including in South America, to replace those stocks.But other companies, namely large multinationals, have made the calculation that the China market is too valuable to leave, corporate executives and trade groups say. Some have begun walling off their Chinese and U.S. operations, continuing to use Xinjiang materials for the China market or maintain partnerships with entities that operate there.Uyghur workers at a factory in Xinjiang, China, in 2019. A wide range of raw materials and components from Xinjiang currently find their way into factories in China or in other countries, and then to the United States.Gilles Sabrié for The New York TimesIt’s a strategy that Richard Mojica, a lawyer at Miller & Chevalier Chartered, said “should suffice,” since the jurisdiction of U.S. customs extends just to imports, although Canada, the United Kingdom, Europe and Australia are considering their own measures. Instead of moving their operations out of China, some multinationals are investing in alternative sources of supply, and making new investments in mapping their supply chains.How the Supply Chain Crisis UnfoldedCard 1 of 9The pandemic sparked the problem. More

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    China's Solar Dominance Presents Biden With Human Rights Dilemma

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    President Biden’s vow to work with China on issues like climate change is clashing with his promise to defend human rights.WASHINGTON — President Biden has repeatedly pledged to work with China on issues like climate change while challenging Beijing on human rights and unfair trade practices.But those goals are now coming into conflict in the global solar sector, presenting the Biden administration with a tough choice as it looks to expand the use of solar power domestically to reduce the United States’ carbon dioxide emissions.The dilemma stems from an uncomfortable reality: China dominates the global supply chain for solar power, producing the vast majority of the materials and parts for solar panels that the United States relies on for clean energy. And there is emerging evidence that some of China’s biggest solar companies have worked with the Chinese government to absorb minority workers in the far western region of Xinjiang, programs often seen as a red flag for potential forced labor and human rights abuses.This week, Mr. Biden is inviting world leaders to a climate summit in Washington, where he is expected to unveil an ambitious plan for cutting America’s emissions over the next decade. The administration is already eyeing a goal of generating 100 percent of the nation’s electricity from carbon-free sources such as solar, wind or nuclear power by 2035, up from only 40 percent last year. To meet that target, the United States may need to more than double its annual pace of solar installations.That is likely to be an economic boon to China, since the United States still relies almost entirely on Chinese manufacturers for low-cost solar modules, many of which are imported from Chinese-owned factories in Vietnam, Malaysia and Thailand.China also supplies many of the key components in solar panels, including more than 80 percent of the world’s polysilicon, a raw material that most solar panels use to absorb energy from sunlight. Nearly half of the global supply comes from Xinjiang alone. In 2019, less than 5 percent of the world’s polysilicon came from U.S.-owned companies.“It’s put the Democrats in a hard position,” said Francine Sullivan, the vice president for business development at REC Silicon, a polysilicon maker based in Norway with factories in the United States. “Do you want to stand up to human rights in China, or do you want cheap solar panels?”The administration is increasingly under pressure from influential supporters not to turn a blind eye to potential human rights abuses in order to achieve its climate goals.“As the U.S. seeks to address climate change, we must not allow the Chinese Communist Party to use forced labor to meet our nation’s needs,” Richard L. Trumka, the president of the A.F.L.-C.I.O., wrote in a letter on March 12 urging the Biden administration to block imports of solar products containing polysilicon from the Xinjiang region.China’s hold over the global solar sector has its roots in the late 2000s. As part of an effort to reduce dependence on foreign energy, Beijing pumped vast amounts of money into solar technology, enabling companies to make multibillion-dollar investments in new factories and gain market share globally.China’s boom in production caused the price of panels to plummet, accelerating the adoption of solar power worldwide while forcing dozens of companies in the United States, Europe and elsewhere out of business.A solar equipment factory in China’s Jiangxi Province in January. China’s hold over the global solar sector has its roots in the late 2000s, when Beijing began pumping vast amounts of money into solar technology.CHINATOPIX, via Associated PressIn the past few years, Chinese polysilicon manufacturers have increasingly shifted to Xinjiang, lured by abundant coal and cheap electricity for their energy-intensive production.Xinjiang is now notorious as the site of a vast program of detention and surveillance that the Chinese government has carried out against Muslim Uyghurs and other minority groups. Human rights groups say the Chinese authorities may have detained a million or more minorities in camps and other sites where they face torture, indoctrination and coerced labor.In a report last year, Horizon Advisory, a consultancy in Washington, cited Chinese news reports and government announcements suggesting that major Chinese solar companies including GCL-Poly, East Hope Group, Daqo New Energy, Xinte Energy and Jinko Solar had accepted workers transferred with the help of the Chinese government from impoverished parts of Xinjiang.Jinko Solar denied those allegations, as did the Chinese government. Zhang Longgen, a vice chairman of Xinjiang Daqo — a unit of one of the companies cited by Horizon Advisory — said that the polysilicon plants were not labor intensive, and that the company’s workers were freely employed and could quit if they wanted, according to Global Times, a Chinese Communist Party-owned newspaper. The report said that only 18 of the 1,934 workers at Xinjiang Daqo belonged to ethnic minorities, and that none were Uyghur.The other companies did not respond to requests for comment.Experts have had difficulty estimating how many laborers may have been coerced into working in Chinese solar facilities given restrictions on travel and reporting in Xinjiang. Many multinational companies have also struggled to gain access to the region’s factories to rule out the risk of forced labor in their supply chains.Mark Widmar, the chief executive of First Solar, a solar panel maker based in the United States, said exposure to Xinjiang was “the unfortunate reality for most of the industry.”“How the industry has evolved, it’s made it difficult to be comfortable that you do not have some form of exposure,” he said. “If you try to follow the spaghetti through the spaghetti bowl and really understand where your exposure is, that’s going to be tough.”The revelations have attracted attention from lawmakers and customs officials, and prompted concerns among solar investors that the sector could be destined for tougher regulation.Under the Trump administration, American customs agents took a harder line against products reportedly made with forced labor in Xinjiang, including a sweeping ban on cotton and tomatoes from the region. Those restrictions have forced a reorganization of global supply chains, especially in the apparel sector.The Biden administration has said it is still reviewing the Trump administration’s policies, and it has not yet signaled whether it will pursue other bans on products or companies. But both Mr. Biden and his advisers have insisted that the United States plans to confront China on human rights abuses in Xinjiang.A spokeswoman for the National Security Council said that the draconian treatment of Uyghurs “cannot be ignored,” and that the administration was “studying ways to effectively ensure that we are not importing products made from forced labor,” including solar products.Congress may also step in. Since the beginning of the year, the House and Senate have reintroduced versions of the Uyghur Forced Labor Prevention Act, which would assume that imports from Xinjiang were made with forced labor and block them from American ports, unless the importer showed proof otherwise. The House version of the bill singles out polysilicon as a priority for enforcement.The legislation has broad bipartisan support and could be included in a sweeping China-related bill that Democrats hope to introduce this year, according to congressional staff members.Amid the threat of new restrictions, the Solar Energy Industries Association, a trade group, has led an effort to help solar companies trace materials in their supply chain. It has also organized a pledge of 236 companies to oppose forced labor and encouraged companies to sever any ties with Xinjiang by June.Some Chinese companies have responded by reshuffling their supply chains, funneling polysilicon and other solar products they manufacture outside Xinjiang to American buyers, and then directing their Xinjiang-made products to China and other markets.Analysts say this kind of reorganization is, in theory, feasible. About 35 percent of the world’s polysilicon comes from regions in China other than Xinjiang, while the United States and the European Union together make up around 30 percent of global solar panel demand, according to Johannes Bernreuter, a polysilicon market analyst at Bernreuter Research.John Smirnow, the general counsel for the Solar Energy Industries Association, said most solar companies were already well on their way toward extricating supply chains from Xinjiang.A high-security facility that is believed to be a re-education camp in the Xinjiang region of China in 2019. President Biden and his advisers have said that they plan to confront China on human rights abuses in Xinjiang.Greg Baker/Agence France-Presse — Getty Images“Our understanding is that all the major suppliers are going to be able to supply assurances to their customers that their products coming into the U.S. do not include polysilicon from the region,” he said.But it is unclear if this reorganization will quell criticism. Episodes of forced labor have also been reported in Chinese facilities outside Xinjiang where Uyghurs and other minorities have been transferred to work. And restrictions on products from Xinjiang could spread to markets including Canada, Britain and Australia, which are debating new rules and guidelines.Human rights advocates have argued that allowing Chinese companies to cleave their supply chains to serve American and non-American buyers may do little to improve conditions in Xinjiang and have pressed the Biden administration for stronger action.“The message has to be clear to the Chinese government that this economic model is not going to be supported by governments or businesses,” said Cathy Feingold, the director of the A.F.L.-C.I.O.’s International Department.Chinese companies are also facing pressure from Beijing not to accede to American demands, since that could be seen as a tacit criticism of the government’s activities in Xinjiang.In a statement in January, the China Photovoltaic Industry Association and China Nonferrous Metals Industry Association condemned “irresponsible statements” from U.S. industries, which they said were directed at curbing Xinjiang’s development and “meddling in Chinese domestic affairs.”“It is widely known that the ‘forced labor’ issue is in its entirety the lie of the century that the United States and certain other Western countries have concocted from nothing,” they said.On Monday, Secretary of State Antony Blinken warned that the United States was falling behind China on clean energy production.But bringing solar manufacturing back to the United States could be a challenge, analysts said, given the time needed to significantly bolster American production, and it could also raise the price of solar panels in the short term.The United States still has a handful of facilities for manufacturing polysilicon, but they have faced grim prospects since 2013, when China put retaliatory tariffs on American polysilicon. Hemlock Semiconductor mothballed a new $1.2 billion facility in Tennessee in 2014, while REC Silicon shut its polysilicon facility in Washington in 2019.China has promised to carry out large purchases of American polysilicon as part of a trade deal signed last year, but those transactions have not materialized.In the near term, tensions over Xinjiang could be a boon for the few remaining U.S. suppliers. Ms. Sullivan said some small U.S. solar developers had reached out to REC Silicon in recent months to inquire about non-Chinese products.But American companies need the promise of reliable, long-term orders to scale up, she said, adding that when she explains the limited supply of solar products that do not touch China, people become “visibly ill.”“This is the big lesson,” Ms. Sullivan added. “You become dependent on China, and what does it mean? We have to swallow our values in order to do solar.”Chris Buckley More

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    U.S. Bans All Cotton and Tomatoes From Xinjiang Region of China

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyU.S. Bans All Cotton and Tomatoes From Xinjiang Region of ChinaThe sweeping ban, which was based on concerns about forced labor in the region, could compel companies to reorganize their multinational supply chains.Cotton fields in the Xinjiang region of China. A new ban on imports of cotton from the area could have sweeping implications for apparel makers.Credit…Agence France-Presse — Getty ImagesJan. 13, 2021Updated 6:32 p.m. ETWASHINGTON — The Trump administration on Wednesday announced a ban on imports of cotton and tomatoes from the Xinjiang area of China, as well as all products made with those materials, citing human rights violations and the widespread use of forced labor in the region.The measure could have sweeping implications for makers of apparel and food products, many of whom have sought to distance themselves from atrocities in Xinjiang but have struggled to ensure their supply chains are free of all raw materials from the region. The area is a major source of cotton, coal, chemicals, sugar, tomatoes and polysilicon, a component in solar panels, that are then fed into factories around China and the world.The ban allows customs officials to stop imports that they suspect are made with raw materials from Xinjiang, regardless of whether they travel into the United States directly from China or through another country.China has carried out a vast crackdown on predominantly Muslim minority groups in the far west Xinjiang region, including detaining a million or more Uighurs, Kazakhs and other groups in camps and closely surveilling the rest of the population, human rights groups say.Forced labor also appears to be widespread in the region. The U.S. Customs and Border Protection said an investigation found numerous indicators of forced labor in Xinjiang, including debt bondage, restriction of movement, withheld wages, and abusive living and working conditions. The Chinese government denies the existence of forced labor in Xinjiang, saying all arrangements are voluntary.Scott Nova, the executive director of the Workers Rights Consortium, a labor rights group, called the ban “a high-decibel wake-up call to any apparel brand that continues to deny the prevalence and problem of forced-labor-produced cotton” in the region.“This ban will redefine how the apparel industry — from Amazon to Nike to Zara — sources its materials and labor,” Mr. Nova said. “Any global apparel brand that is not either out of Xinjiang already or plotting a very swift exit is courting legal and reputational disaster.”The Workers Rights Consortium estimates that American brands and retailers import more than 1.5 billion garments that use Xinjiang materials every year, representing more than $20 billion in retail sales. China is also the world’s largest tomato producer, with Xinjiang accounting for most of that production, the group says.Independent researchers and media reports have linked dozens of the world’s most prominent multinational companies to workers or products from Xinjiang, including Apple, Nike, Kraft Heinz and Campbell Soup. Campbell said it no longer sources products from the Xinjiang region.Some textile and apparel companies that used cotton or yarn from Xinjiang have announced that they are severing ties, including Patagonia, Marks and Spencer and H&M. But many firms have found it difficult to trace the origins of all the products used by their Chinese suppliers, especially given the lack of access for independent auditors to facilities in Xinjiang.The order will “send a crystal-clear message to the trade community: know your supply chains,” said Mark Morgan, the acting commissioner for U.S. Customs and Border Protection. Importers are required to ensure that their own supply chains are free from forced labor, he added. “It’s the law.”The Trump administration has added increasingly restrictive measures on Xinjiang, including placing sanctions on dozens of companies and individuals over alleged human rights violations.In December, customs officials announced a ban on cotton products made by the Xinjiang Production and Construction Corps, an economic and paramilitary group that produces much of the region’s cotton. U.S. Customs and Border Protection has already detained 43 shipments valued at more than $2 million under that ban, officials said Wednesday.Congress is also considering sweeping legislation that would block imports from Xinjiang, unless companies are able to prove that supply chains that run through the region are free of forced labor.While the United States has taken the most forceful action on this front, both Canada and Britain introduced rules this week to limit goods linked to Xinjiang from entering their countries.Despite growing concerns over Chinese practices in the region, exports from Xinjiang to the United States and Europe grew significantly from 2019 to 2020, according to the Center for Strategic and International Studies.But trade experts say the new measures will raise questions about whether customs officials are equipped to fully enforce such a wide ban, which will require tracing Xinjiang materials through supply chains around the world.A report published in October by the U.S. Government Accountability Office found that customs suffered from staff shortages and other issues despite a new division and resources devoted to blocking goods made with forced labor.In a call with reporters on Wednesday, Brenda Smith, the executive assistant commissioner at Customs and Border Protection’s Office of Trade, said it was “a challenge to be able to link what we see arriving in a port of entry back to the raw materials produced in Xinjiang.” The department is applying new tracking methods to uncover products made with forced labor, she said.The department is increasingly making use of new technologies, like pollen analysis, to try to identify cotton and other materials from Xinjiang in foreign products, officials said.AdvertisementContinue reading the main story More