Esquel Seeks Injunction Over Entity List Designation Despite Expected Commerce Action

Changi Esquel Textile (CJE), a Hong Kong-based apparel company and part of the Esquel group of companies, filed for a preliminary injunction on July 19 against its placement on the Commerce Department's Entity List. The company is seeking the injunction even though it expects an announcement soon on potential changes to its status on the list, it said. "The government has informed Plaintiffs that there will likely be a development regarding CJE’s continued Entity List designation by August 1," the company said.

CJE would like a hearing on the injunction request on Aug. 9, but if the company is removed from the list before then, it "will immediately inform the court and request to remove this hearing from the calendar," it said. The company initially filed its case (Changji Esquel Textile Co. Ltd. et al. v. Gina M. Raimondo et al., D.C. Cir. #21-01798) on July 6 in the U.S. District Court for the District of Columbia after it was placed on the list by the Trump administration over allegations that the manufacturer used forced labor from the Muslim Uyghur minority population in China's Xinjiang region (see 2107070022).

CJE based its preliminary injunction contention on two claims: that the U.S.'s reason for placing CJE on the list was not one of the five permitted reasons for placing a company on the Entity List and that the government offered no "specific and articulable facts" for the listing.

Congress included a list of reasons for when Commerce can place a company on the list in the Export Control Reform Act, CJE said. Since the behavior CJE is accused of committing -- employing forced labor -- is not included in the list, the company does not belong on the Entity List, it said. "It necessarily follows that Defendants cannot list an entity based on the entity’s alleged involvement in some other, non-specified area," CJE said. "To do so would flout the express limit Congress placed on Defendants’ listing authority through ECRA. ... If Congress had wanted to give Defendants broad discretion to address national security and foreign policy concerns without regulating which types of national security and foreign policy concerns justify action, it easily could have done so."

CJE also held that they're likely to succeed in the case due to Commerce's lack of "specific and articulable facts" supporting the listing. The absence of such facts in CJE's case prompts a reversal of the list designation. "Defendants provided no facts to support this finding, much less 'specific' or 'articulable' facts," the motion said. "Nor have Defendants provided Esquel with such facts despite repeated requests.

"The lack of 'specific and articulable facts' to support Defendants’ allegation against CJE makes sense: There are none. Esquel does not and has not ever used forced labor. The claim that CJE did so is antithetical to everything Esquel stands for. CJE has participated in many independent audits -- both before the listing and after -- and all of them have come back clean."