Hong Kong-Based Apparel Company Fights Entity List Placement in DC Circuit Court

Changji Esquel Textile (CJE), a Hong Kong-based apparel company and part of the Esquel group of companies, filed a July 6 lawsuit in the U.S. District Court for the District of Columbia to have its placement on the Commerce Department's Entity List dropped (Changji Esquel Textile Co. Ltd. et al. v. Gina M. Raimondo et al., D.C. Cir. #21-01798). The Trump administration put CJE on the list last year for alleged practices of using forced labor from the Muslim Uyghur minority population in China's Xinjiang region.

CJE said it was wrongly placed on the list and has provided evidence to the End-User Review Committee (ERC). "It is our continued hope that the Department of Commerce will voluntarily address what is clearly an error," Esquel CEO Marjorie Yang said in a news release. "But so far, the ERC has given no meaningful response to the comprehensive materials we have submitted and taken no step to rectify its mistaken inclusion of Changji Esquel on the Entity List. Accordingly, we have been forced to take legal action in order to protect our business interests and mitigate the devastating harm that is accruing daily to our business, employees and business partners."

CJE's challenge includes a Fifth Amendment due process claim. By failing to provide the evidence on which the designation is based and an opportunity to rebut the determination, Commerce violated CJE's constitutionally protected right to due process, the complaint said. Commerce's actions also violated the Administrative Procedure Act since the designation constitutes final agency action, subjecting it to judicial review, and fails to base the designation on “specific and articulable” facts or evidence, the complaint said.

“The appalling assertion that CJE would use, or has ever used, forced labor is antithetical to everything Esquel stands for,” the company said in the compliant. “Neither CJE nor any other company within Esquel has ever engaged in the practice of forced labor in Xinjiang or anywhere else in the world. ... Yet the Trump Administration added CJE to the Entity List without prior notice, without evidence, and without any opportunity for CJE to defend itself against Defendants’ odious label -- just as the Trump Administration was found to have done in several recent matters involving other entities improperly singled out without legal or factual justification.”

CJE said its cotton mills in Xinjiang are highly automated, independently audited and in full compliance with leading Global Organic Textiles Standards since 2008. The company's most recent GOTS certification was renewed Jan. 16, it said. The company has suffered as a result of the designation, CJE said, having been forced to close its factories in Mauritius. Esquel's Sri Lankan facility is operating at half capacity to weather the designation. Esquel's U.S. subsidiary, Esquel New York, “has suffered substantial irreparable harms resulting from CJE's entity listing” as well, the complaint said.