Fashion Industry Increasingly Sourcing Outside China, Pushing for More UFLPA Transparency

Compliance with the Uyghur Forced Labor Prevention Act has "significantly impacted" U.S. fashion companies' "sourcing practices," and many importers are diversifying away from China and other countries in Asia to mitigate supply chain risks, the U.S. Fashion Industry Association said in its annual survey of industry executives released July 31. Nearly 80% percent of survey respondents said they plan to reduce apparel sourcing from China over the next two years, with a record high 15% planning to “strongly decrease” sourcing from the country.

“This strong sentiment was not present in past studies,” the report said.

The survey results, compiled from answers to questions sent to executives from 30 leading U.S. fashion brands, retailers, importers and wholesalers from April to June, show that one of the fashion industry's “most serious business” concerns is forced labor risks in supply chains, USFIA President Julia Hughes said. “The fashion industry has not wavered in our commitment to eliminate all forced labor from the supply chain, but we know it is going to take time to achieve that goal,” she said. “In the meantime, there is a very clear impact on cotton sourcing in China and Asia.”

Of those surveyed, 86% said they plan to reduce sourcing cotton apparel from China, and another 55% said they plan to reduce sourcing non-cotton apparel from China. Through the first five months of 2023, China accounted for 10% of U.S. cotton apparel imports, the lowest percentage since falling to 27.6% in 2017, the report said. China also accounted for 24% of U.S. imports of non-cotton apparel during that same time frame, a "significant decrease" from 40% in 2017, the report said.

USFIA also noted that UFLPA concerns are affecting U.S. imports from countries beyond China. About 22% of fashion industry officials said they plan to reduce sourcing cotton from other Asian countries, up from 10% of respondents last year. "The findings align with CBP’s statistics, which indicate that shipments from China and other Asian countries have been subject to investigation or detention under UFLPA enforcement," the report said.

Industry executives told the association there are “growing social and labor compliance risks” associated with Vietnam and Cambodia, and pointed specifically to “potential links” between Vietnamese products and forced labor in China’s Xinjiang region. “As Vietnam’s garment industry relies heavily on using imported textile raw materials from China, almost the same amount of Vietnam’s textile and apparel products were subject to CBP’s UFLPA investigations as China in FY2023,” the report said. USFIA stressed that imports from other Asian countries are “NOT immune to UFLPA as they often use textile inputs made in China through a highly-integrated regional supply chain.”

CBP can take steps to aid the industry’s sourcing and compliance efforts by improving "transparency and clarity of UFLPA enforcement,” survey respondents said, and sharing “more essential enforcement data with U.S. fashion companies.” They called for more "visibility" on detained shipments and "more clarity" on the information needed to release a detained shipment, including what types of documents "should be acceptable.” Survey respondents also asked CBP to provide better guidance on what the agency is looking for in detained shipments and "why a particular shipment was not released," the report said.

The respondents also called on CBP to conduct more "engagement with industry stakeholders,” including providing more opportunities to engage with CBP's Office of Field Operations. "There needs to be a better understanding of how garments are procured/sourced and methods to deter forced labor vs. blank statements with no guidance," the report said.

The respondents also said CBP should leverage "existing programs, such as a company’s ‘trusted trader importer status,’ and provide more tools supporting companies’ supply chain mapping and traceability efforts." One survey respondent suggested the administration allow more agencies to "validate cotton traceability.”

The UFLPA has caused U.S. fashion companies to make new "efforts to fully comply with the law," including by devoting more resources to compliance, the report said. About 62% of survey respondents expect costs “associated with trade barriers and compliance with trade regulations” to increase this year, and another 75% said they also expect costs to rise with respect to "compliance with factory, social and environmental regulations.”

CBP did not immediately respond to our request for comment.