Sheffield's Murphy Says She Identified 55,000 Companies Involved in XUAR; Only 4 on Entity List

A team at Sheffield Hallam University has identified 55,000 companies involved in the Xinjiang Uyghur Autonomous Region (XUAR), including 3,300 companies operating in textiles and 150 companies where there is "significant evidence of participation in state-sponsored transfer of legal labor," SHU professor Laura Murphy said at a hearing on April 18. The hearing was held by the Congressional-Executive Committee on China titled the "Implementation of the Uyghur Forced Labor Prevention Act & the Global Supply Chain Impact."

But only four of the companies identified have been added to the UFLPA entity list and zero new companies have been added to the list since the bill was passed, Murphy said. DHS Under Secretary for Strategy, Policy, and Plans Robert Silvers recently said that one of the top priorities of the interagency Forced Labor Enforcement Task Force was to add more companies to the entity list (see 2303200054).

Murphy said that she believes all of those companies should be added to the list as part of an effort to expand the entity list. To do that in a way that is "robust and vigorous" while giving companies enough information to "exclude suppliers" that are the worst actors, Murphy said, the administration should start by adding companies that are state-owned operations that have "been instrumental in the development of the labor transfer programs." These companies have transferred 5,000 people to their own facilities and some are state-owned enterprises that disguise themselves as universities, Murphy said.

"These companies are egregious bad actors, and they're not on our entities list," she said. "It is my suspicion based on media reports about what's getting stopped that CBP is in fact stopping goods made by some of these companies, but importers don't know necessarily who those companies are."

Another set of companies that could be added are textile companies operating in the region, as importers could then link them to their parent companies operating in the Uyghur region and then pressure those companies to move out or stop sourcing from the region, Murphy said. A similar strategy could also be used for the automotive and mineral sectors, which have been in the Uyghur region and are known to be "actively involved and to have important access to the United States," Murphy said.

"There's more than enough information in the public sphere now to really vigorously add more companies to the Entity List to be a signal to the Uyghur community and to advocacy groups that the UFLPA entity lists are being taken seriously but also to show the import community where they can begin the process of eliminating forced labor made goods," Murphy said.

Kit Conklin, a nonresident senior fellow at the Atlantic Council, said that companies who make investments to identify forced labor should be able to do so and "take measures to mitigate" risk. Conklin said that while UFLPA enforcement is complex, "with senior management support in line with guidance, effective risk management programs can be established to identify UFLPA exposure and mitigate the risk of force labor in global supply chains."

Conklin also explained that while UFLPA detentions are a small portion of U.S. customs enforcement, the scope of the law is much bigger when looking at raw materials that come from Xinjiang. Conklin said that a "significant percentage" of global lithium ion batteries can be traced back to Xinjiang, along with 20% of calcium carbide, 10% of rayon, and 9% of beryllium. This, along with the lack of a de minimis exception, makes it imperative for all suppliers to be diligent, including those not located in China, Conklin said.

"Over the years, things like anti-corruption and sanctions compliance have [become] standard pillars of corporate compliance programs," Conklin said. "Forced labor needs to be one of those pillars as well."