Choose Words Carefully in Forced Labor Communications With Chinese Suppliers, Lawyer Says

Companies attempting to comply with U.S. laws against importing goods made with forced labor need to choose their words carefully when communicating with Chinese suppliers, said a trade lawyer on a recent webinar. A Chinese law enacted in recent years means using the words Uyghur or Xinjiang, among others, could expose the importer or their Chinese suppliers to legal liability.

The country’s recently enacted Anti-Foreign Sanctions Law makes it illegal for Chinese companies to comply with foreign country laws that are deemed discriminatory and restrictive against Chinese citizens’ organizations, including U.S. sanctions and the Uyghur Forced Labor Prevention Act, David Stepp, of Crowell & Moring, said.

The words Xinjiang or Uyghur are trigger words that could require a Chinese company to report or record the use of that word to the Chinese government under the AFSL, Stepp said. The use of either of those words also gives private companies a right to sue U.S. multinationals who helped the Chinese company comply with the law, Stepp said on the March 21 webinar.

Penalties include suspension of visas for executives, seizure of assets, and being blacklisted in China, Stepp said. Chinese companies also can sue U.S. companies that have made requests that violate the law.

One workaround for U.S. companies is to refer to the International Labor Organization’s conventions on forced labor, rather than U.S. forced labor laws, in communications with Chinese companies. No references to U.S. laws and documents should be made with Chinese entities and individuals, Stepp said. “You can talk about forced labor at a high level, but certainly not UFLPA” because “Uyghurs are specifically involved,” he said.

“You can mention the ILO conventions on forced labor as well as your requirements of your supplier code of conduct that's on your website and incorporated into your into your supply agreements,” Stepp said.

A company that has a branch within China could also be subject to counter measures from the Chinese government, so companies with employees in China also need to be careful, Stepp said. "We have a Shanghai office. With colleagues there, we are not able to talk about the UFLPA, Xinjiang, and similar forced labor topics connected to those two to the entity and ethnic Uyghurs," Stepp said. "So, bottom line, you've got to be very careful when you're talking to Chinese colleagues and your suppliers on topics that could maybe trigger the AFSL."