New Report on Auto Industry’s Alleged Forced Labor Links Hints at Increased Enforcement

In December 2022, researchers from Sheffield Hallam University and the Helena Kennedy Centre for International Justice published a report titled “Driving Force: Automotive Supply Chains and Forced Labor in the Uyghur Region” (the “Report”). The Report describes itself as detailing the automotive industry’s alleged extensive connections to the Xinjiang Uyghur Autonomous Region (“XUAR”), and provides recommendations to automakers and lawmakers to reduce these alleged ties. It drew significant media attention, which shows that forced labor and related enforcement remain a focus for the United States.

The Report

Besides discussing Chinese government policy to expand the XUAR’s industrial base, the Report discusses what it views as the automotive industry’s connections to the region. It states the belief that double-digit mining, processing, or manufacturing companies relevant to the automotive sector are operating in the region, several of which are alleged to have documented connections to forced labor practices. It also asserts that many downstream companies in the automobile industry have exposure to goods made in the XUAR.¹ In addition, according to the researchers’ contact with auto manufacturers, they believe these automakers have limited visibility into significant sections of their supply chains, including part processing and refining, which may have ties to the XUAR.²

The Report includes recommendations for both governments and car manufacturers to reduce the industry’s exposure to the XUAR. For governments, it urges them to pass laws on minimum due diligence standards and bans on imports made with forced labor, along with a priority focus on the automotive sector.³ Recommendations for the auto industry were far more extensive, and included efforts to improve due diligence in their supply chains, report on any uncovered links to the XUAR, stop assuming suppliers are free from links to the XUAR, and other “remedial” measures.⁴

Reponses to the Report

The Report drew significant media attention. Ray Curry, President of the prominent United Auto Workers labor union, responded by saying, “The time is now for the auto industry to establish high-road supply chain models outside the Uyghur Region that protect labor and human rights and the environment.”⁵

In addition, Senator Ron Wyden (D-OR), Chairman of the Senate Finance Committee, also took actions in response to the Report.⁶ Senator Wyden reportedly said, “I recognize automobiles contain numerous parts sourced across the world and are subject to complex supply chains. However, this recognition cannot cause the United States to compromise its fundamental commitment to upholding human rights and US law.”⁷

For companies with global supply chains, the Report, and the media and congressional attention it received, should be viewed in light of the larger US policy context, including the passage and implementation of the Uyghur Forced Labor Prevention Act (“UFLPA”) in recent years. Interested parties should take note that forced labor, particularly US concerns related to Xinjiang, will likely remain an important US policy priority in coming months and years. Moreover, the US Department of Homeland Security’s UFLPA Strategy Report states, in relevant part:

As part of [the Forced Labor Enforcement Task Force, (“FLETF”)]’s effort to engage NGOs and the private sector on the UFLPA, the FLETF will host more joint-interagency meetings with NGOs and the private sector to discuss the enforcement initiatives and trade facilitation measures. Additionally, the FLETF will institute recurring working-level meetings with the private sector and NGOs on this strategy and will meet with these NGOs and private-sector groups no less than biannually. . . .⁸

Thus, interested parties should also carefully consider the increased UFLPA enforcement risks related to the Report, monitor related developments (including similar reports relevant to its industry), and take actions to protect its supply chain from potential sudden and severe disruptions.

¹ Laura Murphy, Kendyl Salcito, Yalkun Uluyol, Mia Rabkin, and an anonymous team of authors, Driving Force: Automotive Supply Chains and Forced Labor in the Uyghur Region 1 (2022). 1.

² Id. at 4.

³ Id. at 4.

⁴ Id. at 4-5.

⁵ https://www.reuters.com/business/autos-transportation/uaw-calls-automakers-move-supply-chain-out-xinjiang-region-2022-12-06/

⁶ https://www.finance.senate.gov/chairmans-news/senate-finance-committee-chair-wyden-questions-major-automakers-about-supply-chain-links-to-forced-labor-in-xinjiang-china

⁷ Id.

⁸ US Department of Homeland Security, Office of Strategy, Policy, and Plans, Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China 53 (2022)