Human Rights and Human Rights Violations

Latest story

125 Shares199 Views

Solar Supply Chain Grows More Opaque Amid Human Rights Concerns

by

The global industry is cutting some ties to China, but its exposure to forced labor remains high and companies are less transparent, a new report found.Global supply chains for solar panels have begun shifting away from a heavy reliance on China, in part because of a recent ban on products from Xinjiang, a region where the U.S. government and United Nations accuse the Chinese government of committing human rights violations.But a new report by experts in human rights and the solar industry found that the vast majority of solar panels made globally continue to have significant exposure to China and Xinjiang.The report, released Tuesday, also faulted the solar industry for becoming less transparent about the origin of its products. That has made it more difficult for buyers to determine whether solar panels purchased to power homes and electricity grids were made without forced labor.The analysis was done by Alan Crawford, a solar industry analyst, and Laura T. Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in England, along with researchers who chose to remain anonymous for fear of retribution from the Chinese government. The London-based Modern Slavery and Human Rights Policy and Evidence Center provided funding.The solar industry has come under stiff criticism in recent years for its ties to Xinjiang, which is a key provider of polysilicon, the material from which solar panels are made. The region produces roughly a third of both the world’s polysilicon and its metallurgical-grade silicon, the material from which polysilicon is made.As a result, many firms have promised to scrutinize their supply chains, and several have set up factories in the United States or Southeast Asia to supply Western markets.The Solar Energy Industries Association, the industry’s biggest trade association, has been calling on companies to shift their supply chains and cut ties with Xinjiang. More than 340 companies have signed a pledge to keep their supply chains free of forced labor.But the report found that major global companies remain likely to have extensive exposure to Xinjiang, and potentially to forced labor, calling into question the progress. The report rated the world’s five biggest solar manufacturers — all with headquarters in China — as having “high” or “very high” potential exposure to Xinjiang.Some Chinese companies, like LONGi Solar and JA Solar, have clear ties to suppliers operating in Xinjiang, the report said. But even within “clean” supply chains set up to serve the United States or Europe, many companies still appear to be getting raw materials from suppliers that have exposure to Xinjiang, Ms. Murphy said.In many cases, according to the information they issue publicly, companies aren’t buying enough materials from outside Xinjiang to meet their production goals, indicating that they may be using undisclosed suppliers. In other cases, companies sent Ms. Murphy information about their supply chains that was directly contradictory.“At every stage, there’s missing information,” she said.China’s dominance over the solar industry has presented a challenge for the United States and other countries, which are rushing to deploy solar panels to mitigate the impact of climate change. China controls at least 80 percent of global manufacturing for each stage of the supply chain.The Chinese government denies the presence of forced labor in the work programs it runs in Xinjiang, which transfer groups of locals to mines and factories. But human rights experts say those who refuse such programs can face detention or other punishments. A U.S. law that went into effect in June last year, the Uyghur Force Labor Prevention Act, assumes that any product with materials from Xinjiang is made with forced labor until proved otherwise.Since then, U.S. customs officials have detained $1.64 billion of imported products, including an unspecified volume of solar panels, to check them for compliance. Solar companies say the detentions have caused widespread delays in solar installations in the United States, putting the country’s energy transition at risk.As solar projects continue to ramp up for the energy transition, the concern is that materials and equipment with ties to forced labor could grow.Over the next decade or so, the solar industry projects it will regularly install double the amount it has in past years, with annual growth expected to average 11 percent. In the near term, the manufacturing capacity in the United States is sufficient to meet less than a third of national demand, according to Wood McKenzie, an energy research and consulting firm.In June, Walk Free, an international human rights group, released a report estimating that 50 million people globally lived under forced labor conditions in 2021, an increase of 10 million from 2016.The organization attributed part of that growth to the much-needed but rapid increase in renewable energy to address climate change. The organization said it supported the energy transition but wanted to stop forced labor as a source of products.“Find it, fix it and prevent it,” said Grace Forrest, founding director of Walk Free.One example in the new report is JinkoSolar, a Chinese-owned company that has done some of the most extensive work to establish a supply chain outside China, including factories in Vietnam, Malaysia and the United States. But the report found that the company’s apparent use of unidentified raw materials from China kept its potential exposure to Xinjiang high.In May, Homeland Security Investigations, an arm of the Department of Homeland Security, raided JinkoSolar’s factory in Jacksonville, Fla., and an office in San Francisco. The inquiry appears to be linked to multiple concerns, among them that JinkoSolar misrepresented the source of some imports containing materials from Xinjiang and incorrectly classified products, resulting in an incorrect duty rate, a person with knowledge of the investigation said.The solar industry has begun publishing less information about the origins of its supplies, making it more difficult for buyers to determine whether solar panels are made without forced labor.Tony Cenicola/The New York TimesA spokesperson for Homeland Security Investigations declined to comment, citing a continuing investigation.JinkoSolar said in a statement that, based on the information available to the company, any speculation that the investigation was tied to forced labor was “unfounded,” and that it had a longstanding commitment to transparency and compliance with U.S. law.The company has also called claims that it had high exposure to Xinjiang “baseless.” It said that it was confident in its supply chain traceability, that products for the U.S. market were made only with U.S. and German polysilicon and that U.S. customs officials have reviewed and released JinkoSolar products.The new report also raised questions about the supply chain for Hanwha Qcells, a South Korean company that has become one of the largest producers of solar panels made in the United States. In January, Qcells announced a $2.5 billion expansion of its Georgia operations that would make it the sole company producing all of its components — ingots, wafers, cells and finished panels — in the United States.Despite Qcells’ growing U.S. presence, the report concluded that the company’s potential exposure to Xinjiang was very high, since the company uses undisclosed suppliers in China for the vast majority of its products.The report also said a Chinese company, Meike Solar Technology, which gets raw material from Xinjiang, reported Qcells as one of its largest customers in the first half of 2022, though Qcells said it had cut off the supplier relationship in 2021.“Qcells has adopted a code of conduct that prohibits forced labor made products in our supply chain, and we terminate agreements if suppliers fail to comply,” the company said in a statement. As part of its strategy to guard against products from forced labor, Qcells said, it uses maps to trace product origins and verification audits to ensure its suppliers follow its code of conduct. The company said none of its North America products had been detained by customs officials.In a statement to the researchers, LONGi said that it always complied with the applicable laws and ethics in jurisdictions where it operated, and that polysilicon from Xinjiang was used in modules that were sold in China.JA Solar did not respond to a request for comment from the researchers or from The New York Times. Both LONGi and JA Solar have been planning to set up factories in the United States.Tax credits and other incentives for clean energy offered under the Inflation Reduction Act of 2022 have been unleashing new investments in the United States. On Friday, First Solar, a U.S.-based manufacturer, announced plans to invest up to $1.1 billion for a new U.S. factory at a location yet to be determined.But Michael Carr, executive director of Solar Energy Manufacturers for America, which represents U.S.-based solar manufacturers, said the United States had fallen so far behind China in solar manufacturing that an enormous amount of work, capital and technical knowledge would be needed to catch up.“It’s hard to have certainty — and some might say impossible to know — the sourcing of the polysilicon until you have a domestic supply of wafers and an alternative to China,” Mr. Carr said.Zolan Kanno-Youngs More

More stories

  • 125 Shares149 Views

    in Economy

    Yellen’s China Visit Aims to Ease Tensions Amid Deep Divisions

    by

    Mutual skepticism between the United States and China over a wide range of economic and security issues has festered in recent years.The last time a U.S. Treasury secretary visited China, Washington and Beijing were locked in a trade war, the Trump administration was preparing to label China a currency manipulator, and fraying relations between the two countries were roiling global markets.Four years later, as Treasury Secretary Janet L. Yellen prepares to arrive in Beijing, many of the economic policy concerns that have been festering between the United States and China remain — or have even intensified — despite the Biden administration’s less antagonistic tone.The tariffs that President Donald J. Trump imposed on Chinese goods are still in effect. President Biden has been working to restrict China’s access to critical technology such as semiconductors. And new restrictions curbing American investment in China are looming.Treasury Department officials have downplayed expectations for major breakthroughs on Ms. Yellen’s four-day trip, which begins when she arrives in Beijing on Thursday. They suggest instead that her meetings with senior Chinese officials are intended to improve communication between the world’s two largest economies. But tensions between United States and China remain high, and conversations between Ms. Yellen and her counterparts are likely to be difficult. She met in Washington with Xie Feng, China’s ambassador, on Monday, and the two officials had a “frank and productive discussion,” according to the Treasury.Here are some of the most contentious issues that have sown divisions between the United States and China.Technology and trade controlsChinese officials are still smarting at the Biden administration’s 2022 decision to place significant limitations on the kinds of advanced semiconductors and chip-making machinery that can be sent to China. Those limits have hampered China’s efforts to develop artificial intelligence and other kinds of advanced computing that are expected to help power each country’s economy and military going forward.The government of the Netherlands, which is home to semiconductor machinery maker ASML, on Friday announced new restrictions on machinery exports to China. On Monday, China placed restrictions on exports of germanium and gallium, two metals used to make chips.The Biden administration is mulling further controls on advanced chips and on American investment into cutting-edge Chinese technology.Semiconductors have always been one of the biggest and most valuable categories of U.S. exports to China, and while the Chinese government is investing heavily in its domestic capacity, it remains many years behind the United States.The Biden administration’s subsidy program to strengthen the U.S. semiconductor industry has also rankled Chinese officials, especially since it includes restrictions on investing in China. Companies that accept U.S. government money to build new chip facilities in the United States are forbidden to make new, high-tech investments in China. And while Chinese officials — and some American manufacturers — were hopeful that the Biden administration would lift tariffs on hundreds of billions of dollars of Chinese imports, that does not seem to be in the offing. While Ms. Yellen has questioned the efficacy of tariffs, other top officials within the administration see the levies as helpful for encouraging supply chains to move out of China.The administration is employing both carrots and sticks to carry out a policy of “de-risking” or “friend-shoring” — that is, enticing supply chains for crucial products like electric vehicle batteries, semiconductors and solar panels out of China.President Biden during a visit to a Taiwan Semiconductor Manufacturing Company plant under construction in Phoenix. The Biden administration’s efforts to assist the U.S. semiconductor industry has rankled Chinese officials.T.J. Kirkpatrick for The New York TimesDeteriorating business environmentsCompanies doing business in China are increasingly worried about attracting negative attention from the government. The most recent target was Micron Technology, a U.S. memory chip maker that failed a Chinese security review in May. The move could cut Micron off from selling to Chinese companies that operate key infrastructure, putting roughly an eighth of the company’s global revenue at risk. In recent months, consulting and advisory firms in China with foreign ties have faced a crackdown.American officials are growing more concerned with the Chinese government’s use of economic coercion against countries like Lithuania and Australia, and they are working with European officials and other governments to coordinate their responses.Businesses are also alarmed by China’s ever-tightening national security laws, which include a stringent counterespionage law that took effect on Saturday. Foreign businesses in China are reassessing their activities and the market information they gather because the law is vague about what is prohibited. “We think this is very ill advised, and we’ve made that point to several members of the government here,” said R. Nicholas Burns, the U.S. ambassador to China, in an interview in Beijing.In the United States, companies with ties to China, like the social media app TikTok, the shopping app Temu and the clothing retailer Shein, are facing increasing scrutiny over their labor practices, their use of American customer data and the ways they import products into the United States.CurrencyChina’s currency, the renminbi, has often been a source of concern for American officials, who have at times accused Beijing of artificially weakening its currency to make its products cheaper to sell abroad.The renminbi’s recent weakness may pose the most difficult issue for Ms. Yellen. The currency is down more than 7 percent against the dollar in the past 12 months and down nearly 13 percent against the euro. That decline makes China’s exports more competitive in the United States. China’s trade surplus in manufactured goods already represents a tenth of the entire economy’s output.The renminbi is not alone in falling against the dollar lately — the Japanese yen has tumbled for various reasons, including rising interest rates in the United States as the Federal Reserve tries to tamp down inflation.Chinese economists have blamed that factor for the renminbi’s weakness as well. Zhan Yubo, a senior economist at the Shanghai Academy of Social Sciences, said the decline in the renminbi was the direct result of the Fed’s recent increases in interest rates.At the same time, China has been cutting interest rates to help its flagging economy. The interest rate that banks charge one another for overnight loans — a benchmark that tends to influence all other interest rates — is now a little over 5 percent in New York and barely 1 percent in Shanghai. That reverses a longstanding pattern in which interest rates were usually higher in China.The Fed’s rate increases have made it more attractive for companies and households to send money out of China and invest it in the United States, in defiance of Beijing’s stringent limits on overseas money movements.China pledged as part of the Phase 1 trade agreement with the United States three years ago not to seek an advantage in trade by pushing down the value of its currency. But the Biden administration’s options may be limited if China lets its currency weaken anyway.Global debtChina has provided more than $500 billion to developing countries through its lending program, making it one of the world’s largest creditors. Many of those borrowers, including several African nations, have struggled economically since the pandemic and face the possibility of defaulting on their debt payments.The United States, along with other Western nations, has been pressing China to allow some of those countries to restructure their debt and reduce the amount that they owe. But for more than two years, China has insisted that other creditors and multilateral lenders absorb financial losses as part of any restructuring, bogging down the loan relief process and threatening to push millions of people in developing countries deeper into poverty.In June, international creditors including China agreed to a debt relief plan with Zambia that would provide a grace period on its interest payments and extend the dates when its loans are due. The arrangement did not require that the World Bank or International Monetary Fund write off any debts, offering global policymakers like Ms. Yellen hope for similar debt restructuring in poorer countries.Human rights and national security issuesTensions over national security and human rights have created an atmosphere of mutual distrust and spilled over into economic relations. The flight of a Chinese surveillance balloon across the United States this year deeply unsettled the American public, and members of Congress have been pressing the administration to reveal more of what it knows about the balloon. Mr. Biden’s recent labeling of China’s leader, Xi Jinping, as a “dictator” also rankled Chinese officials and state-run media.American officials continue to be concerned about China’s human rights violations, including the suppression of the democracy movement in Hong Kong and the detention of mainly Muslim ethnic minorities in the Xinjiang region of northwestern China. A senior Treasury Department official, speaking on the condition of anonymity before Ms. Yellen’s trip, said the United States had no intention of shying away from its views on human rights during the meetings in China.Chinese officials continue to protest the various sanctions that the United States has issued against Chinese companies, organizations and individuals for national security threats and human rights violations — including sanctions against Li Shangfu, China’s defense minister. The Chinese government has cited those sanctions as a reason for its rejection of high-level military dialogues. More

  • 113 Shares199 Views

    in Economy

    Opposition Grows to U.S. Imports of ‘Laundered’ Russian Oil

    by

    Human rights groups and Ukrainian officials want the United States to stop buying Russian crude oil that has been refined into other products in third countries like IndiaUkrainian officials and human rights groups are asking the United States to close what they describe as a loophole that allows Russian crude oil that has been refined in other countries to be shipped to the United States.The Biden administration issued a ban in March last year on purchasing crude oil and other petroleum products directly from Russia, immediately after the Kremlin’s invasion of Ukraine. The European Union, which was heavily dependent on Russia for supplies of energy, banned Russian crude in December and then petroleum products in February.But both the United States and the European Union continue to buy Russian oil that has been refined in other countries into gasoline, fuel oil and other products. Countries like Turkey, the United Arab Emirates, Singapore, China and particularly India are snapping up Russian oil, which must now be sold at a reduced price under a cap imposed by the United States and Europe. These nations — which have been described as “laundromat” countries by environmental and human rights groups — then refine the oil and send it to other markets.This activity is legal: Once Russian crude oil has been “substantially transformed” by being refined in another country, it legally ceases to be Russian. The same standards have long applied to oil from other nations that are under sanctions, like Iran and Venezuela.Still, opposition to this sort of trade is growing.Oleg Ustenko, an economic adviser to the Ukrainian president, said such U.S. purchases meant “that we are indirectly supporting this insurrection, which is just not acceptable.”“I don’t know how it sounds in English, but in Ukrainian I’m calling this strategy as a cockroach strategy, meaning they are trying to find all possible loopholes, as a cockroach trying to crawl through these holes into your apartment,” he said of Russia’s oil trade. “And what you need to do, you need to close all these holes.”It’s difficult to estimate how much refined petroleum the United States is importing that originally came from Russia. But a report released Thursday by Global Witness, a London-based organization that advocates environmental and human rights, suggested that the volume was small but not insignificant.Take India, one of the biggest participants in this activity. The United States imported roughly 152 million barrels of refined petroleum products in the first five months of this year, with about 8 percent coming from India.More than 80 percent of refined oil that the United States imports from India came from a single port: Sikka, in Gujarat Province, which is home to the Jamnagar Refinery, the world’s largest refinery, according to calculations by Global Witness. And in the first five months of the year, the group estimated, 35 percent of the crude oil arriving at the port was of Russian origin.To block these flows, Global Witness proposes banning all imports from refineries that buy Russian crude oil. The group sent members to Washington last week to lobby members of Congress on the move, including in the committees overseeing energy and support for Ukraine.“Banning oil from refineries running on Russia crude is a common-sense decision for the U.S.,” said Lela Stanley, senior investigator at Global Witness.Mr. Ustenko and Ms. Stanley said such a ban was unlikely to have much impact on U.S. gas prices. But Tom Kloza, global head of energy analysis at the Oil Price Information Service, which tracks wholesale and retail prices of oil, said he believed it would have some effect.“If you remove a number of countries as potential sources for gasoline and diesel, there’s an impact in the U.S. and an impact in Europe,” he said.Mr. Kloza said that the Biden administration might be reluctant to take any step that would raise gas prices with an election approaching — and that such a ban could also prove difficult to police. He pointed to the example of Saudi Arabia, which last year had started importing Russian diesel, while also exporting more diesel from Saudi refineries to other countries.“There’s lots of ways to get around the Russian boycott,” he said.It also remains to be seen what such a ban would mean for the U.S. relationship with India, which the Biden administration regards as a key strategic partner. The Jamnagar Refinery is owned by Reliance Industry, which is in turn controlled by Mukesh Ambani, an Indian businessman. Mr. Ambani is a close partner to the Indian prime minister, Narendra Modi, and was a guest at the state dinner that the White House threw for Mr. Modi last week. More

  • 125 Shares189 Views

    in Economy

    Apple Reaches Deal With Investors to Audit Its Labor Practices

    by

    The tech giant will assess its compliance with its official human rights policy, according to a federal filing.Apple will conduct an assessment of its U.S. labor practices under an agreement with a coalition of investors that includes five New York City pension funds.The assessment will focus on whether Apple is complying with its official human rights policy as it relates to “workers’ freedom of association and collective bargaining rights in the United States,” the company said in a filing last week with the Securities and Exchange Commission.The audit comes amid complaints by federal regulators and employees that the company has repeatedly violated workers’ labor rights as they have sought to unionize over the past year. Apple has denied the accusations.“There’s a big apparent gap between Apple’s stated human rights policies regarding worker organizing, and its practices,” said Brad Lander, the New York City comptroller, who helped initiate the discussion with Apple on behalf of the city’s public worker pension funds.As part of its agreement with the coalition of investors, which also includes other pension funds for unionized workers, Apple agreed to hire a third-party firm to conduct the assessment, the coalition said in a letter to the company’s chairman on Tuesday.Labor Organizing and Union DrivesN.Y.C. Nurses’ Strike: Nurses at Montefiore Medical Center in the Bronx and Mount Sinai in Manhattan ended a three-day strike after the hospitals agreed to add staffing and improve working conditions.Amazon: A federal labor official rejected the company’s attempt to overturn a union victory at a warehouse on Staten Island, removing a key obstacle to contract negotiations between the union and the company.A Union Win: Organized labor claimed a big victory on Jan. 3, gaining a foothold among about 300 employees at a video game maker owned by Microsoft.Electric Vehicles: In a milestone for the sector, employees at an E.V. battery plant in Ohio voted to join the United Automobile Workers union, citing pay and safety issues as key reasons.The letter also laid out recommendations for the assessment, which include hiring a firm that has expertise in labor rights and that does not advise companies on how to avoid unionization. It recommended that the firm be “as independent as practicable.”Apple’s federal filing did not refer explicitly to a third party, and the company declined to comment further.Members of the investor coalition controlled about $7 billion worth of Apple stock as of last week, out of a market capitalization of more than $2 trillion. In its financial filing announcing the assessment, Apple offered few details, saying that it would conduct the assessment by the end of the year and that it would publish a report related to the assessment.Last year, workers voted to unionize at two Apple stores — in Townson, Md., and Oklahoma City — and workers at two other stores filed petitions to hold union election before withdrawing them.Many workers involved in union organizing at the company said they enjoyed their jobs and praised their employer, citing benefits like health care and stock grants and the satisfaction of working with Apple products. But they said they hoped that unionizing would help them win better pay, more input into scheduling and more transparency when it comes to obtaining job assignments and promotions.In May, Apple announced that it was raising its minimum hourly starting wage to $22 from $20, a step that some workers interpreted as an effort to undermine their organizing campaigns.Workers have also filed charges accusing Apple of labor law violations in at least six stores, including charges that the company illegally monitored them, prohibited union fliers in a break room, interrogated them about their organizing, threatened them for organizing and that it stated that unionizing would be futile.The Communications Workers of America, the union representing Apple workers in Oklahoma City, has also filed a charge accusing Apple of setting up an illegal company union at a store in Columbus, Ohio — one created and controlled by management with the aim of stifling support for an independent union.The National Labor Relations Board has issued formal complaints in two of the cases, involving stores in Atlanta and New York.Apple has said that “we strongly disagree” with the claims brought before the labor board and that it looks forward to defending itself. The company has emphasized that “regular, open, honest, and direct communication with our team members is a key part of Apple’s collaborative culture.”The investor coalition that pushed for the labor assessment argues that Apple’s response to the union campaigns is at odds with its human rights policy because that policy commits it to respect the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work, which includes “freedom of association and the effective recognition of the right to collective bargaining.”Mr. Lander, the New York comptroller, said that the coalition initially reached out to Apple’s board last spring to discuss the company’s posture toward the union organizing, but that it did not get a substantive response.The coalition then filed a shareholder proposal in September urging Apple to hire an outside firm to assess whether the company was following through on its stated commitment to labor rights. The company responded late last year and the two sides worked out an agreement in return for the coalition withdrawing its proposal, according to Mr. Lander.A coalition of some of the same investors, including the New York pension funds, has filed a similar proposal at Starbucks, where workers have voted to unionize at more than 250 company-owned stores since late 2021. Like Apple, Starbucks has cited its commitment to the International Labor Organization standards like freedom of association and the right to take part in collective bargaining.But Starbucks has consistently opposed its employees’ attempts to unionize, and Starbucks has not engaged with the coalition of investors to work out an agreement. Jonas Kron, chief advocacy officer of Trillium Asset Management, one of the investors pushing proposals at both companies, said he expected the Starbucks proposal to go to a vote of the company’s shareholders. The company declined to comment.The federal labor board has issued a few dozen formal complaints against Starbucks for violations including retaliating against workers involved in organizing and discriminating against unionized workers when introducing new benefits; the company has denied breaking labor laws. More

  • 138 Shares169 Views

    in Economy

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

    by

    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

  • 113 Shares139 Views

    in Economy

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

    by

    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

  • 150 Shares99 Views

    in Economy

    Red Flags for Forced Labor Found in China’s Car Battery Supply Chain

    by

    The photograph on the mining conglomerate’s social media account showed 70 ethnic Uyghur workers standing at attention under the flag of the People’s Republic of China. It was March 2020 and the recruits would soon undergo training in management, etiquette and “loving the party and the country,” their new employer, the Xinjiang Nonferrous Metal Industry Group, announced.But this was no ordinary worker orientation. It was the kind of program that human rights groups and U.S. officials consider a red flag for forced labor in China’s western Xinjiang region, where the Communist authorities have detained or imprisoned more than 1 million Uyghurs, ethnic Kazakhs and members of other largely Muslim minorities.The scene also represents a potential problem for the global effort to fight climate change.China produces three-quarters of the world’s lithium ion batteries, and almost all the metals needed to make them are processed there. Much of the material, though, is actually mined elsewhere, in places like Argentina, Australia and the Democratic Republic of Congo. Uncomfortable with relying on other countries, the Chinese government has increasingly turned to western China’s mineral wealth as a way to shore up scarce supplies.That means companies like the Xinjiang Nonferrous Metal Industry Group are assuming a larger role in the supply chain behind the batteries that power electric vehicles and store renewable energy — even as China’s draconian crackdown on minorities in Xinjiang fuels outrage around the world.The Chinese government denies the presence of forced labor in Xinjiang, calling it “the lie of the century.” But it acknowledges running what it describes as a work transfer program that sends Uyghurs and other ethnic minorities from the region’s more rural south to jobs in its more industrialized north.Xinjiang Nonferrous and its subsidiaries have partnered with the Chinese authorities to take in hundreds of such workers in recent years, according to articles displayed proudly in Chinese on the company’s social media account. These workers were eventually sent to work in the conglomerate’s mines, a smelter and factories that produce some of the most highly sought minerals on earth, including lithium, nickel, manganese, beryllium, copper and gold.It is difficult to trace precisely where the metals produced by Xinjiang Nonferrous go. But some have been exported to the United States, Germany, the United Kingdom, Japan, South Korea and India, according to company statements and customs records. And some have gone to large Chinese battery makers, who in turn, directly or indirectly, supply major American entities, including automakers, energy companies and the U.S. military, according to Chinese news reports.It is unclear whether these relationships are ongoing, and Xinjiang Nonferrous did not respond to requests for comment.But this previously unreported connection between critical minerals and the kind of work transfer programs in Xinjiang that the U.S. government and others have called a form of forced labor could portend trouble for industries that depend on these materials, including the global auto sector.A new law, the Uyghur Forced Labor Prevention Act, goes into effect in the United States on Tuesday and will bar products that were made in Xinjiang or have ties to the work programs there from entering the country. It requires importers with any ties to Xinjiang to produce documentation showing that their products, and every raw material they are made with, are free of forced labor — a tricky undertaking given the complexity and opacity of Chinese supply chains.A Critical Year for Electric VehiclesAs the overall auto market stagnates, the popularity of battery-powered cars is soaring worldwide.Charging Stations: The Biden administration unveiled proposed regulations that would require stations built with federal dollars to be located no more than 50 miles apart.General Motors: The company hopes to become a leading force in the electric vehicle industry. Its chief executive shared how G.M. intends to get there.Turning Point: Electric vehicles still account for a small slice of the market, but this year, their march could become unstoppable. Here’s why.New Materials: As automakers seek to electrify their fleets and to direct electricity more efficiently, alternatives to silicon are gaining traction.The apparel, food and solar industries have already been upended by reports linking their supply chains in Xinjiang to forced labor. Solar companies last year were forced to halt billions of dollars of projects as they investigated their supply chains.The global battery industry could face its own disruptions given Xinjiang’s deep ties to the raw materials needed for next-generation technology.Trade experts have estimated that thousands of global companies may actually have some link to Xinjiang in their supply chains. If the United States fully enforces the new law, it could result in many products being blocked at the border, including those needed for electric vehicles and renewable energy projects.Some administration officials raised objections to cutting off shipments of all Chinese goods linked with Xinjiang, arguing that it would be disruptive to the U.S. economy and the clean energy transition.Representative Thomas R. Suozzi, a Democrat from New York who helped create the Congressional Uyghur Caucus, said that while banning products from the Xinjiang region might make goods go up in price, “it’s too damn bad.”“We can’t continue to do business with people that are violating basic human rights,” he said. To understand how reliant the battery industry is on China, consider the country’s role in producing the materials that are critical to the technology. While many of the metals used in batteries today are mined elsewhere, almost all of the processing required to turn those materials into batteries takes place in China. The country processes 50 to 100 percent of the world’s lithium, nickel, cobalt, manganese and graphite, and makes 80 percent of the cells that power lithium ion batteries, according to Benchmark Mineral Intelligence, a research firm.“If you were to look at any electric vehicle battery, there would be some involvement from China,” said Daisy Jennings-Gray, a senior analyst at Benchmark Mineral Intelligence.The materials Xinjiang Nonferrous has produced — including a dizzying array of valuable minerals, like zinc, beryllium, cobalt, vanadium, lead, copper, gold, platinum and palladium — have gone into a wide variety of consumer products, including pharmaceuticals, jewelry, building materials and electronics. The company also claims to be one of China’s largest producers of lithium metal, and its second-largest producer of nickel cathode, which can be used to make batteries, stainless steel and other goods.Xinjiang Non-Ferrous Metal Industry Group was one of the region’s earliest miners, operating the state-owned No. 3 pegamite mining pit beginning in the 1950s.Shen Longquan/Visual China Group, via Getty ImagesIn recent years, the company has expanded into Xinjiang’s south, the homeland of most Uyghurs, acquiring valuable new deposits that executives describe as “critical” to China’s resource security.Ma Xingrui, a former aerospace engineer who was appointed Communist Party secretary of Xinjiang in 2021, has talked up Xinjiang’s prospects as a source of high-tech materials. This month, he told executives from Xinjiang Nonferrous and other state-owned companies that they should “step up” in new energy, materials and other strategic sectors.Xinjiang Nonferrous’s role in work transfer programs ramped up several years ago, as part of efforts by the Chinese leader Xi Jinping to drastically transform Uyghur society to become richer, more secular and loyal to the Communist Party. In 2017, the Xinjiang government announced plans to transfer 100,000 people from southern Xinjiang into new jobs over three years. Dozens of state-owned companies, including Xinjiang Nonferrous, were assigned to absorb 10,000 of those laborers in return for subsidies and bonuses.Transferred workers appear to make up only a minor part of the labor force at Xinjiang Nonferrous, perhaps a few hundred of its more than 7,000 employees. The company and its subsidiaries reported recruiting 644 workers from two rural counties of southern Xinjiang from 2017 to 2020, and training more since then.Some laborers were sent to the company’s copper-nickel mine and smelter, which are operated by Xinjiang Xinxin Mining Industry, a Hong Kong-listed subsidiary that has received investment from the state of Alaska, the University of Texas system and Vanguard. Other laborers went to subsidiaries that produce lithium, manganese and gold.Before being assigned to work, predominantly Muslim minorities were given lectures on “eradicating religious extremism” and becoming obedient, law-abiding workers who “embraced their Chinese nationhood,” Xinjiang Nonferrous said.Inductees for one company unit underwent six months of training including military-style drills and ideological training. They were encouraged to speak out against religious extremism, oppose “two-faced individuals” — a term for those who privately oppose Chinese government policies — and write a letter to their hometown elders expressing gratitude to the Communist Party and the company, according to the company’s social media account. Trainees faced strict assessments, with “morality” and rule compliance accounting for half of their score. Those who scored well earned better pay, while students and teachers who violated rules were punished or fined.Even as it promotes the successes of the programs, the company’s propaganda hints at the government pressure on it to meet labor transfer goals, even through the coronavirus pandemic.A 2017 article in the Xinjiang Daily quoted one 33-year-old villager as saying that he was initially “reluctant to go out to work” and “quite satisfied” with his income from farming, but was persuaded to go to work at Xinjiang Nonferrous’ subsidiary after party members visited his house several times to “work on his thinking.” And in a visit in 2018 to Keriya County, Zhang Guohua, the company president, told officials to “work on the thinking” of families of transferred laborers to ensure that no one abandoned their jobs.Chinese authorities say that all employment is voluntary, and that work transfers help free rural families from poverty by giving them steady wages, skills and Chinese-language training.“No one has been forced to become ‘transferred labor’ in Xinjiang,” Wang Wenbin, a spokesman for the Chinese foreign ministry, told reporters in Beijing this month.It is difficult to ascertain the level of coercion any individual worker has faced given the limited access to Xinjiang for journalists and research firms. Laura T. Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in Britain, said that resisting such programs is seen as a sign of extremist activity and carries a risk of being sent to an internment camp.“A Uyghur person cannot say no to this,” she said. “They are harassed or, in the government’s words, educated,’ until they are forced to go.”Files from police servers in Xinjiang published by the BBC last month described a shoot-to-kill policy for those trying to escape from internment camps, as well as mandatory blindfolds and shackles for “students” being transferred between facilities.Other Chinese metal and mining companies also appear to be linked with labor transfers at a smaller scale, including Zijin Mining Group Co. Ltd., which has acquired cobalt and lithium assets around the globe, and Xinjiang TBEA Group Co. Ltd., which makes aluminum for lithium battery cathodes, according to media reports and academic research. Other entities that were previously sanctioned by the United States over human rights abuses are also involved in the supply chain for graphite, a key battery material that is only refined in China, according to Horizon Advisory, a research firm.An indoctrination center in Hotan, China. In 2017, the regional government announced plans to transfer 100,000 people from the cities of Kashgar and Hotan in southern Xinjiang into new jobs.Gilles Sabrié for The New York TimesThe raw materials that these laborers produce disappear into complex and secretive supply chains, often passing through multiple companies as they are turned into auto parts, electronics and other goods. While that makes them difficult to trace, records show that Xinjiang Nonferrous has developed multiple potential channels to the United States. Many more of the company’s materials are likely transformed in Chinese factories into other products before they are sent abroad.For example, Xinjiang Nonferrous is a current supplier to the China operations of Livent Corporation, a chemical giant with headquarters in the United States that uses lithium to produce a chemical used to make automobile interiors and tires, hospital equipment, pharmaceuticals, agrochemicals and electronics.A Livent spokesman said that the firm prohibits forced labor among its vendors, and that its due diligence had not indicated any red flags. Livent did not respond to a question about whether products made with materials from Xinjiang are exported to the United States.In theory, the new U.S. law should block all goods made with any raw materials that are associated with Xinjiang until they are proven to be free of slavery or coercive labor practices. But it remains to be seen if the U.S. government is willing or able to turn away such an array of foreign goods.“China is so central to so many supply chains,” said Evan Smith, the chief executive of the supply chain research company Altana AI. “Forced labor goods are making their way into a really broad swath of our global economy.”Raymond Zhong More

  • 125 Shares189 Views

    in Economy

    Supply Chains Tainted by Forced Labor in China, Panel Told

    by

    Human rights activists and others urged the Biden administration to cast a wide net to stop imports of products made with forced labor in Xinjiang.WASHINGTON — Human rights activists, labor leaders and others urged the Biden administration on Friday to put its weight behind a coming ban on products made with forced labor in the Xinjiang region of China, saying slavery and coercion taint company supply chains that run through the region and China more broadly.The law, the Uyghur Forced Labor Prevention Act, was signed by President Biden in December and is set to go into effect in June. It bans all goods made in Xinjiang or with ties to certain entities or programs that are under sanctions and transfer minority workers to job sites, unless the importer can demonstrate to the U.S. government that its supply chains are free of forced labor.It remains to be seen how stringently the law is applied, and if it ends up affecting a handful of companies or far more. A broad interpretation of the law could cast scrutiny on many products that the United States imports from China, which is home to more than a quarter of the world’s manufacturing. That could lead to more detentions of goods at the U.S. border, most likely delaying product deliveries and further fueling inflation.The law requires that a task force of Biden administration officials produce several lists of entities and products of concern in the coming months. It is unclear how many organizations the government will name, but trade experts said many businesses that relied on Chinese factories might realize that at least some part or raw material in their supply chains could be traced to Xinjiang.“I believe there are hundreds, perhaps thousands, of companies that fit the categories” of the law, John M. Foote, a partner in the international trade practice at Kelley Drye & Warren, said in an interview.The State Department estimates that the Chinese government has detained more than one million people in Xinjiang in the last five years — Uyghurs, Kazakhs, Hui and other groups — under the guise of combating terrorism.China denounces these claims as “the lie of the century.” But human rights groups, former detainees, participating companies and the Chinese government itself provide ample documentation showing that some minorities are forced or coerced into working in fields, factories and mines, in an attempt to subdue the population and bring about economic growth that the Chinese government sees as key to stability.Rushan Abbas, the founder and executive director of the nonprofit Campaign for Uyghurs, who has written about the detention of her sister in Xinjiang, said at a virtual hearing convened by the task force on Friday that forced labor had become a “profitable venture” for the Chinese Communist Party, and was meant to reduce the overall population in Xinjiang’s villages and towns.“The pervasiveness of the issue cannot be understated,” she said, adding that forced labor was made possible by “the complicity of industry.”Gulzira Auelkhan, an ethnic Kazakh who fled Xinjiang for Texas, said in the hearing that she had been imprisoned for 11 months in Xinjiang alongside ethnic Kazakhs and Uyghurs who were subject to torture and forced sterilization. She also spent two and a half months working in a textile factory making school uniforms for children and gloves, which her supervisors said were destined for the United States, Europe and Kazakhstan, she said through a translator.It is already illegal to import goods made with slave labor. But for products that touch on Xinjiang, the law will shift the burden of proof to companies, requiring them to provide evidence that their supply chains are free of forced labor before they are allowed to bring the goods into the country.Supply chains for solar products, textiles and tomatoes have already received much scrutiny, and companies in those sectors have been working for months to eliminate any exposure to forced labor. By some estimates, Xinjiang is the source of one-fifth of the world’s cotton and 45 percent of its polysilicon, a key material for solar panels.But Xinjiang is also a major provider of other products and raw materials, including coal, petroleum, gold and electronics, and other companies could face a reckoning as the law goes into effect.In the hearing on Friday, researchers and human rights activists presented allegations of links to forced labor programs for Chinese manufacturers of gloves, aluminum, car batteries, hot sauce and other goods.Horizon Advisory, a consultancy in Washington, claimed in a recent report based on open-source documents that the Chinese aluminum sector had numerous “indicators of forced labor,” like ties to labor transfer programs and the Xinjiang Production and Construction Corps, which has been a target of U.S. government sanctions for its role in Xinjiang abuses.Xinjiang accounts for about 9 percent of the global production of aluminum, which is used to produce electronics, automobiles, planes and packaging in other parts of China.The State Department estimates that China has detained more than one million people in Xinjiang in the last five years. The Urumqi No. 3 Detention Center has room for at least 10,000 people. Mark Schiefelbein/Associated Press“China is an industrial hub for the world,” Emily de La Bruyère, a co-founder of Horizon Advisory, said at the hearing.The Latest on China: Key Things to KnowCard 1 of 4Marriages and divorces. More

  • 113 Shares189 Views

    in Economy

    E.U. Considers Due Diligence Law for Company Supply Chains

    by

    Large companies operating in the European Union could be held responsible for environmental violations or human rights abuses committed by businesses in their supply chains under a law proposed on Wednesday by the European Commission, the bloc’s administrative arm.“We can no longer turn a blind eye on what happens down our value chains,” said Didier Reynders, the European Union’s commissioner for justice.Under the legislation, known as a due diligence law, businesses would need to establish regulations to detect, prevent and mitigate breaches of human rights, such as child labor, as well as environmental hazards in their supply chains. National governments would define the financial penalties for companies violating the rules.Victims could sue for compensation in domestic courts of E.U. member nations, even if the harm occurred outside the bloc.The commission proposed the rules after some member nations, including Germany and France, introduced different versions of due diligence law at the national level.The legislation will now be discussed by the European Parliament and the 27 national governments, with all parties able to modify the language. The final draft will require passage by the E.U. lawmakers and member nations. The whole process could take a year or more.The proposal would initially apply to companies with more than 500 employees and annual revenue over 150 million euros (about $170 million), a group that includes about 10,000 E.U. businesses, about 1 percent of the total. Around 2,000 companies based outside the bloc but doing business in the European Union, amounting to an annual revenue of more than €150 million, would also be covered. After two years, the range would be expanded to include smaller businesses in so-called high-impact sectors, such as textiles, food products and mining.Businesses expressed concern over the proposal.“It is unrealistic to expect that European companies can control their entire value chains across the world,” said Pierre Gattaz, president of BusinessEurope, a trade organization. “Ultimately these proposals will harm our companies’ ability to remain competitive worldwide.”But Richard Gardiner of Global Witness said the legislation had the potential to become “a watershed moment for human rights and the climate crisis,” if the European Union resisted efforts to water down the proposed measures.“We’ve been investigating big corporations for decades, and when we reveal the harm they’re causing to people and planet, the response is invariably the same: ‘We weren’t aware,’” Mr. Gardiner said. “Today’s proposal from the commission may make that response illegal.”But some analysts remained skeptical, pointing out that the commission’s final proposal, which was delayed several times, is much less ambitious than what was initially planned.“This outcome is the result of an unprecedented level of corporate lobbying,” said Alberto Alemanno, a professor of European Union law at the business school HEC Paris. He said the final result “was downgraded into yet another narrow piece of tick-the-boxes compliance law.”Julia Linares Sabater, a senior officer at the WWF European Policy Office, said the businesses affected “represent a drop in the ocean of the E.U.’s total economy.”“The E.U. needs to be far more ambitious to successfully tackle the climate and biodiversity crises,” she added. More