What to Do About Xinjiang

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Last month, the Trump administration announced a limited set of new restrictions on imports from Xinjiang. The move came in response to a rising chorus of congressional voices calling for the U.S. to act against the forced reeducation and labor regime in the Muslim-majority region in China. Yet the new restrictions have limited reach. Even in an election year when President Trump sees clear political gain in bashing China, he has left untouched his most potent weapons to punish human rights abuses in Xinjiang.

While the Trump administration has slowly but steadily increased pressure, it failed to accelerate coercive policy to a level that would really cause Chinese President Xi Jinping to second guess his policy. In fact, Xi recently doubled down, again publicly endorsing the current Xinjiang strategy, and policy targeting non-Han Chinese is growing stricter in Tibet and Mongolia. A more aggressive U.S. approach is needed in order to generate the sort of economic reaction required to have any hope of influencing Chinese policymaking.

What’s a sensible goal for U.S. action? A realistic intermediate aim of anti-forced labor policy toward China would be to scare corporations into investing the resources to monitor their supply chains and eat higher production costs to ensure their suppliers’ workers are free. Right now the companies that take the plunge and cut off relationships with their sketchiest suppliers risk losing market share to bad actors who can keep their costs low, particularly if reputational risk is limited. Increased law enforcement activity and broader public awareness are the two keys to drive a change in the incentive structure.

What tools are at the U.S. government’s disposal? Broadly, Congress could empower Customs and Border Protection (CBP) to step up its enforcement on imports of products with forced labor. The executive branch could also bolster sanctions regimes and campaign diplomatically to highlight China’s misdeeds and present a united global front against Xinjiang camps.

Other moves, such as accepting more Uighur asylum-seekers, funding refugee camps and organizing an international boycott of the 2022 Beijing Olympic games have merit but fall out of this post’s scope. Broadly, such actions would serve to alleviate Uighur suffering and increase awareness.

Given that Xi believes that Uighur radicalization is a grave threat to social stability, he is unlikely to reverse course anytime soon. However, the steps outlined below would help ensure that American firms and consumers are not complicit in one of the worst human rights abuses of the 21st century and that they have the chance to embarrass Xi into easing off.

Bolstering CBP’s Authority

One underappreciated vehicle to push back on forced labor in Xinjiang is plain old Customs and Border Patrol Protection enforcement on exports from Xinjiang. CBP, charged with screening imports at all points of entry, is America’s last line of defense in preventing illegal goods from entering America.

The executive branch should direct CBP to issue a Withhold Release Order (WRO) on major exports from Xinjiang like cotton and tomatoes and aggressively pursue civil penalties against importers caught in violation. Thanks to a 2016 law that closed a loophole, WROs have gained new relevance as a policy tool, allowing CPB to require designated importers or products from particular regions to prove that their goods are not produced with forced labor.

Most WROs have targeted individual companies or factories, save a 2018 blanket ban on Turkmen cotton (which proved to be a moderate success in impacting policy). For instance, new WRO listings this September went after hair products from Xinjiang’s Lop County Hair Product Industrial Park and cotton processed by Xinjiang Junggar Cotton and Linen Co. CBP optimistically estimates that these enforcement orders could impact up to $200 million in goods, as of now both the government and many Western firms lack transparency into their supply chains to ensure these companies’ goods don’t make it into the United States.

Given that Xinjiang produces 80 percent of China’s cotton, and the U.S. now imports more than 30 percent of its apparel from China, enforcing an even larger WRO would far exceed the current capabilities of CBP. To credibly back such a WRO, the administration would need help from Congress. CBP's forced labor division, charged with enforcing WROs, is working with a $2 million annual budget out of the $17 billion the agency spends annually. That staff’s work has led to seizures of just a few million dollars of the estimated $400 billion in tainted goods that enter the U.S. annually. The challenge is so vast that ad hoc enforcement does little to move the needle on targeted industries. Conducting more targeted campaigns on particularly egregious cases like those in Xinjiang can drum up consumers’ attention and focus corporations’ minds on areas where change might be possible. And Congress may need to increase that budget 50-fold to $100 million a year to really give teeth to a large-scale WRO.

The current regulatory structure around WROs provides for enforcement container-by-container, where CBP occasionally must require companies to cough up proof in specific rare instances when they have cause to believe goods were produced with forced labor.

Another way to beef up forced labor enforcement would be to mandate specific mitigation controls, forcing companies to show to CBP and/or the Securities and Exchange Commission their work on rooting out forced labor in their supply chains. Then, instead of being the primary mechanism of enforcement, container-by-container investigations backed by large mandatory penalties would act as a stress test on the broader controls-based system.

The House passed a bill nearly unanimously that puts the burden on importers to prove that inputs from Xinjiang didn’t use forced labor. However, this bill will not materially change the current enforcement patterns because it doesn’t mandate controls and doesn’t fund CBP to execute the mission it calls for.

There does seem to be significant bipartisan support to this push. As one Senate GOP staffer told me in their off-the-record comments, "it's pretty hard to be pro-slavery."

The bill that did the most to gesture in the right direction, Sen. Josh Hawley’s The Slave-Free Business Certification Act, still has major holes. It limits enforcement to publicly traded companies with gross receipts over $500 million, overlooking enormous privately owned American firms with major China exposure like Cargill. It also requires auditing only down to the level of secondary suppliers. The secondary suppliers of major apparel brands like Nike are generally U.S. firms operating on U.S. soil, so this restriction wouldn’t actually do much of anything.

Beefing Up Sanctions

Even with a lot more CPB funding, WROs can impact only the behavior of American firms and companies involved in a supply chain that sends imports to the United States. To reach beyond those bounds, the Securities and Exchange Commission and the Treasury Department could play a key role in bringing pressure to bear on foreign companies.

The tool here for pushing back on human rights abuses in Xinjiang is more familiar: sanctions. Currently, America’s Xinjiang sanctions include individual listings of Chinese government officials involved in the crackdown as well as a number of large and medium-size firms implicated in forced labor use. But the executive branch could do more.

Treasury Department designations have so far proved particularly effective in spurring corporate action. Banning financial transactions with listed entities is a more direct and traceable way of enforcement than banning inputs to imports and is something firms have more experience working with. The recent action on the Xinjiang Production and Construction Corps, a state-owned paramilitary organization that accounts for a quarter of the province’s gross domestic product, is a step in the right direction, but surely there are other targets involved in Xinjiang that a more aggressive treasury staffed with China specialists would designate.

A bill that passed the House but is stalled in the Senate mandates disclosure of firms’ interactions with Xinjiang but has no enforcement mechanism. Tying these disclosures to fines, limiting bond issuances or waving the threat of delistment could provide a real policy lever. If companies like Alibaba facilitate purchases of goods produced with forced labor, perhaps they should face restrictions like those the U.S. put on Russian firms. For instance, the Office of Financial Assets Control used its leverage in threatening secondary sanctions on the aluminum giant Rusal to force a change in ownership structure. Similar threats could encourage Chinese private-sector giants to alter their behavior.

In a best-case scenario, this effort would lead Chinese firms to disengage with Xinjiang labor camps as well as lobby the Chinese government that the economic risks of a global sanctions regime are substantial. Maybe this would change the cost-benefit calculus for Beijing on the whole Xinjiang internment endeavor. There are significant downsides, however. Chinese firms are already increasingly opting to list in Hong Kong or Shanghai instead of New York, and sanctions will surely accelerate this trend. Such aggressive action has the potential to harm U.S. competitiveness relative to European and Asian firms. However, there is already substantial movement within the White House and Congress to delist many, if not all, Chinese firms. There’s a better way forward than the blanket delisting pushes. The U.S. would be better off providing U.S.-listed Chinese firms with an off-ramp by giving them a way to demonstrate how they are uninvolved with the Xinjiang forced labor. If they prove they are clean, they can remain listed on the New York Stock Exchange.

Leading Multilateral Efforts

Ramping up U.S. sanctions and customs enforcement should coincide with a broader diplomatic effort to raise awareness and get allied nations to place the same standards on companies doing business in Xinjiang.

Believe it or not, the U.S. still has some capacity to shame allies into more aggressive action on Xinjiang. Although it's hardly the consensus response, some European politicians have already lauded the U.S. government's actions on Xinjiang. As Raphaël Glucksmann, the French EU parliament member making the most noise on Xinjiang, posted on Instagram last month, "Trump banned imports of cotton and clothes made by Uighur slaves. Sure, he did it from rivalry with China, more than out of a sense of humanity. But EU leaders should die of shame seeing this calamity [Trump] do 100x more than them for the Uighur deportees."

More effective diplomacy would seek to build on rumblings of movement in Europe to raise requirements for multinationals' suppliers' labor standards across the world. This wouldn’t be an entirely novel approach; the U.S. has already begun "exporting" some forced labor standards through trade deals like the United States-Mexico-Canada Agreement. The U.K. first got the ball rolling with the 2015 Modern Slavery Act, which mandated reporting requirements. France recently took it a step further with its 2017 Duty of Vigilance Law, which imposes penalties on firms that do not live up to the standards of the U.N. Guiding Principles on Business and Human Rights. Ideally, there would be some action emanating from Brussels to enforce standards continent-wide, but currently the EU needs some encouragement. Pascal Lamy, former director general of the World Trade Organization and the former French and European Commission official, said that “it is up to the International Labor Organization and to the WTO, who both ban forced labor" to lead the way on the EU's response, not the EU itself.

A good starting place here would be for the U.S. to kick the International Labor Organization (ILO) into gear.

How would this work, in practice?

First, a constituent would file a complaint that a member country is not upholding its obligations. While China has not ratified the forced labor convention, ILO members would certainly have grounds to bring a complaint based on China's signing of the organization’s employment policy or discrimination conventions.

China would certainly object to the start of an investigation, but it does not have veto power within the ILO. The ILO is a unique U.N. agency because it operates by majority rule and 50 percent of the voting share is allocated to trade unions and employer associations. In interviews with representatives from workers and industry groups at the ILO, both sides seemed enthusiastic in supporting such efforts. While China will certainly try to twist arms, the industry organizations represent a diverse enough mix of companies so that the traditional Chinese tactic of punishing the first foreign firm that speaks up on an issue to discourage corporate complaints is unlikely to work.

If a vote succeeds, the organization would appoint a commission of inquiry to produce a report on Xinjiang. They will almost certainly be denied access to the region, which in itself will draw headlines and act as a sort of admission of guilt. Even so, previous ILO commissions of inquiry like the one on forced labor in Myanmar have proved creative in their ability to interview individuals outside the country of concern to substantiate claims. An ILO work product on Xinjiang labor would help clarify the situation by producing a more authoritative report than the journalism and think tank papers that make up most of the current documentation of the situation on the ground. This report would give governments and corporations the cover they need to start making real changes in their relationships with Xinjiang labor.

There are other moves within multilateral institutions that the U.S. can make to put pressure on Beijing. The U.S. could raise the issue in the U.N. General Assembly, Human Rights Council and Security Council (via an Arria-formula meeting). A General Assembly resolution to condemn forced labor in Xinjiang will likely not win passage, but the mere debate will bring attention to and perhaps embarrass China. There is zero chance a Security Council resolution would pass, but calling an emergency meeting would bring the issue to a global stage. Of course, China would be sure to throw a fit at such moves, perhaps calling an emergency session of its own to highlight racism in America, for example. But a U.S. administration should welcome this sort of conversation and use it to contrast America's openness in grappling with its domestic problems with China's denials and obfuscations.

How Would China Respond?

Such actions taken all-together would make a Chinese response likely. Xi has clearly demonstrated his preference for ratcheting down tensions. A full-court-press strategy on an embarrassing domestic issue would almost certainly provoke some sort of response. Some of these actions could do real harm. Perhaps the most damaging moves would be export limitations on inputs critical to America's economy. Some corners of the Chinese internet were calling for limitations of rare earth or pharmaceutical exports after the Trump administration's most recent actions on Huawei. While Xi has held off on such a step for now, for fear of escalating the conflict to China's disadvantage, aggressive moves on Xinjiang may be a bridge too far.

Major responses to U.S. Xinjiang policy, however, do put Xi in a deliciously awkward position. Simply put, reacting strongly to U.S. pressure on Xinjiang betrays how sensitive the Chinese Communist Party (CCP) is about its behavior in the region. The Chinese government has shown some sensitivity to international criticism with regard to its Xinjiang policy, most recently by clamping down on any domestic "Mulan"-related coverage after Western journalists highlighted the movie’s connection to labor camps. Chinese embassies have gone on aggressive campaigns to blunt bubbling criticism of the CCP's Xinjiang policy from the Muslim world. Key to putting Xi in a tough spot is the multilateral component to the pressure—if Xi can dismiss Uighur forced labor policies as just a U.S. adventure, he will have a much easier time sweeping criticism out of the public consciousness.

In the past, those arguing for deemphasizing human rights concerns have pointed to risking Chinese cooperation on other issues. However, I doubt that recent Chinese commitments on climate change, policy toward North Korea, or its posture on Taiwan would be impacted appreciably by U.S. Xinjiang policy. Xi has pursued those policies for reasons other than just their impact on the great power conflict; a more aggressive U.S. approach on Xinjiang isn’t likely to make him give up on carbon neutrality, for example.

Some industry representatives, such as the U.S. Chamber of Commerce, have argued that increasing restrictions on Xinjiang-made products would do more harm than good for Uighur livelihood. In particular, they often cite how a U.S. prohibition on Democratic Republic of the Congo (DRC) forced labor mining backfired, collapsing the eastern DRC’s mining industry and forcing some to join militias to put food on the table.

However, the Xinjiang case is far different. Instead of an import ban imposed in light of a vacuum of governance, Beijing knows exactly what it is doing. Xinjiang workers aren’t struggling to earn enough to eat but, rather, are suffering from oppressive government policy. A step-by-step mitigation strategy preferred by some in industry doesn’t address the fact that supply chain investigators and nongovernmental organizations are not allowed to enter Xinjiang, much less interview the estimated 1.5 million Uighurs living in concentration camps.

Lessons From History

Even if the U.S. can manage to orchestrate a robust coalition, some observers may worry that no international pressure—no matter how intense—can shake CCP leadership. But there is at least one prominent example of international pressure causing a material change in CCP policy.

China’s support of Sudanese leader Omar al-Bashir came into the international spotlight in the early 2000s. In the wake of genocide in Darfur and following waves of global attention and condemnation, China in the mid-2000s shifted its stance of unconditional support for the Sudanese government and ultimately allowed the U.N. to send in peacekeeping forces. And the threat of a 2008 Beijing Olympic Games boycott was likely a significant driver in China’s increasingly public criticism of Bashir.

The push to change China’s posture on Bashir also benefited from a tide of activism. It’s hard to imagine a Xinjiang push getting more global weight behind it than "Save Darfur." Celebrities played a key role in helping to drive the 2008 movement, for instance, with Steven Spielberg withdrawing from an Olympic committee and penning Premier Hu Jintao a public letter urging his action on the issue. But today, stars from Cardi B to LeBron James have spoken publicly about their fear of Chinese blowback. You would be hard pressed to find an A-lister who wasn’t on the record on Darfur in 2008, but even after years of human rights reports, the only stars to speak out against Xinjiang policy are French NBA player Rudy Gobert, American film director Judd Apatow, Swedish pop singer Zara Larsson and a handful of Muslim French actors and soccer players.

And the China of today has changed from the China of the mid-2000s. Xi, despite trying to portray himself as a responsible stakeholder, is a much more aggressive leader at home and abroad than Hu and has shown his willingness, for instance in Hong Kong, to disregard international criticism on what he sees as a core interest. Plus, Sudan was deeply peripheral compared to the importance of Xinjiang. Xi’s primary motivation for cracking down on Uighurs was to prevent the supposedly imminent flowering of a homegrown Islamic State. No economic or reputational hit even at the level of a global Olympics boycott is likely to lead him to pull the plug on this effort before he believes the security situation is taken care of through the only means he believes effective, that of mass incarceration and reeducation. Yet with a situation this dire for millions of Uighurs, it's certainly worth a try. The Trump administration’s China policy thus far has largely consisted of banning Chinese students and in turn undermining America’s future research base, in addition to fighting trade wars, which, if "won," wouldn’t do much more than help Microsoft Azure and Visa compete in China. These moves aren’t even close to enough to achieve meaningful change in Xinjiang, and, as of today, prospects for changes in CCP policy are dim. Yet U.S. multilateral leadership—backed by significant U.S. regulatory changes—offers the only feasible way to change China’s behavior on Xinjiang. It’s a cause well worth fighting for.