In the latest escalation of tensions between the U.S. and China, the U.S. Department of State, Department of the Treasury, Department of Commerce, and the Department of Homeland Security issued a supply chain advisory, warning U.S. companies operating or doing business in the Xinjiang Uyghur Autonomous Region (Xinjiang) and elsewhere in China to abandon those supply chains or face consequences.
The advisory comes as the US has been an outspoken critic of the Chinese using forced labor, such as the Uyghurs, ethnic Kazakhs, ethnic Kyrgyz, and other Muslim minority groups, in factories in Xinjiang Uyghur Autonomous Region and other manufacturing hubs.
The advisory highlights three main types of supply chain exposure to entities involved in human rights abuses presented in this advisory are:
Assisting in developing surveillance tools for the P.R.C. government in Xinjiang;
Relying on labor or goods sourced in Xinjiang, or from factories elsewhere in China implicated in the forced labor of individuals from Xinjiang in their supply chains, given the prevalence of forced labor and other labor abuses in the region; and
Aiding in the construction of internment facilities used to detain Uyghurs and members of other Muslim minority groups, and/or in the construction of manufacturing facilities that are in close proximity to camps operated by businesses accepting subsidies from the P.R.C. government to subject minority groups to forced labor.
It also said, "businesses with potential exposure in their supply chain to entities that engage in human rights abuses in Xinjiang or to facilities outside Xinjiang that use forced labor from Xinjiang in the manufacture of goods intended for domestic and international distribution should be aware of the reputational, economic, and legal risks of involvement with such entities."
The advisory said for companies to "mitigate reputational and other risks," they should complete immediate due diligence policies and procedures to make sure their supply chains in China don't include forced labor.
US Secretary of State Anthony Blinken commented on the advisory via a tweet that read, "This will help U.S. businesses take steps to ensure their supply chains are not tainted by forced labor or other human rights abuses."
Here's the complete advisory note to U.S. companies with supply chains in China:
The advisory will certainly not go well with Bejing. Expect a near-term statement from the Chinese.