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COTTON THE CROSSFIRE

The US crackdown on a major Chinese cotton producer has the fashion industry scrambling

A farmer picks cotton on a farm on the outskirts of Hami, Xinjiang
Reuters/Stringer
A new Trump administration order banning cotton from XPCC and its affiliates is causing confusion for fashion companies.
  • Marc Bain
By Marc Bain

Fashion reporter

On Dec. 2, the US government announced it will seize cotton and cotton products from the Xinjiang Production and Construction Corps (XPCC) and its affiliates at all ports of entry into the country. It was a targeted directive that seems focused on just one Chinese firm, but it has significant ramifications for the fashion industry.

“This order will likely impact the supply chains of virtually every major apparel retailer—from Amazon, to Target, to Zara,” Worker Rights Consortium (WRC), a labor rights watchdog, said in a statement.

XPCC is a quasi-military organization involved in the forced labor of the Uyghur ethnic minority in China’s Xinjiang region—part of a brutal campaign against the group that’s been increasingly likened to genocide. Xinjiang is China’s cotton center, responsible for roughly 80% of the country’s output, and XPCC produces about one-third of that cotton, according to an estimate by The Washington Post. Given China’s status as one of the world’s largest cotton producers and its importance in fashion’s supply chain, any order targeting XPCC cotton could affect a wide range of clothing and footwear companies. WRC estimates more than 500 million products containing XPCC cotton could be entering the US every year.

The new order, which directs US Customs and Border Protection (CBP) to detain incoming products suspected of using XPCC cotton, “is perhaps the widest-reaching customs ban on imports the United States has ever made,” wrote Laura T. Murphy, professor of human rights and contemporary slavery at Sheffield Hallam University in the UK, and Rian Thum, senior research fellow at the University of Nottingham, in an editorial for The Washington Post.

The authors and various others applauded the action, saying companies make themselves complicit in human rights abuses when they sell goods made with XPCC materials.

But as with previous Trump administration directives in areas such as immigration or TikTok, the order has created confusion about how it will work in practice. It also illustrates the complicated tangle of global supply chains, as companies now work to make sure they’re in compliance.

“Companies are trying to understand what is the scope of this,” says Steve Lamar, president and CEO of the American Apparel & Footwear Association (AAFA), an industry trade group with about 300 members representing roughly 1,000 brands. “At the end of the day, it’s our members that are the chief enforcers of this ban. We’re on the frontlines.”

The new action expands on previous sanctions against XPCC issued in July. It applies not only to products made with cotton produced by XPCC, but also to those made by “its subordinate and affiliated entities as well as any products that are made in whole or in part with or derived from that cotton, such as apparel, garments, and textiles.”

It’s unclear, however, what counts as a subordinate or affiliated entity. Are these companies that are majority-owned by XPCC, or minority-owned too? What exactly does “affiliated” mean?

“You’re talking anywhere from about 1,000 entities to about 86,000 entities depending on who you talk to and what they mean by ‘subordinate and affiliated entities,'” says Nate Herman, AAFA’s senior vice president of policy. “XPCC is a quasi-military organization who intentionally obscures their organizational structure. The [US] government has said they’re not going to help. It’s up to industry to figure out who are these related entities and what related entities means. That’s created a lot of confusion.”

A lack of clarity

Herman says it’s also uncertain how customs will enforce the action. Does it apply only to products coming from China, or those from other countries as well? Cotton produced by XPCC winds its way into the yarn turned into finished textiles elsewhere. Fabric made in countries such as Bangladesh and Vietnam may easily contain cotton farmed and ginned by XPCC.

“There’s been nothing shared on that and we’ve been told by customs they will not share anything on that,” Herman says.

Even WRC, which supported the US government’s order, noted in its statement that “CBP will need to up its game on enforcement to achieve the intended effect of this order. Historically, CBP’s forced labor-related enforcement has been insufficient in both rigor and transparency.”

CBP would not provide additional clarity on the language in the order or how it intends to identify products made with cotton from XPCC or any affiliates. “Importers have a responsibility to exercise reasonable care to ensure that their supply chains are free of forced labor and that they otherwise comply with all US trade laws and regulations,” a spokesperson said in a statement.

In response to the government order, the AAFA and other trade groups representing a sizable swath of the American fashion and retail industries released a joint statement. They withheld overt criticism, but pointed out that their own efforts to keep forced labor out of member supply chains can be helped by “clearly defined” orders based on “specific and actionable intelligence.” They called for a coalition of stakeholders and countries, saying it was the only way to end the forced labor of Uyghurs in Xinjiang—a position the AAFA has supported previously.

Lamar says companies should have zero tolerance for forced labor in their supply chains, but he has also been openly critical of blanket bans like the one on XPCC cotton. This September, he argued before the House Ways and Means Committee (pdf) that, without being more precise, they’re impossible to enforce. Companies have also pushed to revise some provisions in proposed legislation that would block certain imports from Xinjiang, according to the New York Times.

Groups focused on labor and human rights have long maintained that companies are ultimately responsible for all the materials that go into their products and must do better at policing them. “International companies are now on notice: if you import any goods produced by the XPCC, you are complicit in human rights crimes,” said Omer Kanat, executive director of Uyghur Human Rights Project, a nonprofit advocacy group, in a statement praising the new order.

Over decades, clothing and footwear makers have built out long, globalized supply chains, and each step in the chain adds a level of obscurity. An American company wanting to make a few thousand shirts might place an order with a factory in Bangladesh. While the company specifies what fabric it would like, it’s often the factory that sources it. The factory buys the fabric from a textile supplier, potentially in another country, specialized in weaving or knitting fabric from yarn. They buy the yarn from a spinner, which bought the raw cotton. For the American company to know where its cotton came from, it has to make sure it’s able to trace each of these steps.

Tangled cotton

To complicate matters further, cotton is a fungible commodity. The long-staple variety commonly used for textiles is grown in Xinjiang but also in India, the US, Brazil, and elsewhere. China, the global leader in processing raw cotton into finished textiles, imports a large share of that cotton, and once cotton from different sources arrives at a factory, it can all get mixed together. The consequence is a material made with forced labor can be present in finished goods sold by a well-known company to US consumers and neither the company nor their customers may know.

This lack of supply-chain transparency is often seen as a failure of the fashion industry’s and one way it contributes to human-rights abuses. Similar problems crop up in products such as seafood, chocolate, and metals used widely in electronics.

In the past decade or so, as criticism from watchdogs and consumers has grown, companies have undertaken greater efforts to trace their supply chains. “There has been some progress in the industry to knowing at least where the fabric is coming from, and in some cases where the yarn is coming from,” says Herman. “The raw material has been the hardest part.”

Since the first sanctions on XPCC in July, AAFA’s member companies have been working to map their supply chains in Xinjiang so they can show they have no direct links to the organization. When they find connections, they’re doing what they can to eliminate them, Herman says. Now many are coming to AAFA with questions about what the new order means and how they can prove they’re not violating it.

The Trump administration hasn’t hesitated to issue vaguely worded orders that leave companies scrambling, particularly when it comes to China. Some believe the confusion is part of the point and a way to pressure companies to cease business in the country. Doing so isn’t always so easy though. In cotton’s case, China made up a little over 22% (pdf) of the world’s production volume last year. Fashion companies might not be able to avoid Chinese cotton even if they wanted to. As they do the very necessary work of ensuring they’re not abetting forced labor, they must now wonder how, and if, the Trump administration will check them on it.

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