Legislators in the United States introduce legislation aimed at restricting goods produced under conditions of forced labor
In a move aimed at combating forced labor, particularly in the Xinjiang Uyghur Autonomous Region of China, the U.S. Congress has introduced a bill known as the No Funds for Forced Labor Act. This legislation, if passed, will require a detailed treasury report on any project approved by an international financial institution that could potentially involve forced labor.
The bill has sparked discussions about the sourcing practices of major fast fashion giants like Shein and Temu. Lawmakers have requested these companies, along with Nike and Adidas, to disclose their compliance with the UFLPA (Uyghur Forced Labor Prevention Act), which was passed into law in 2021.
The UFLPA primarily focuses on the Xinjiang region, where China has been accused of detaining over 1 million Uyghur people. The act requires the U.S. Treasury Secretary to instruct U.S. executive directors at international financial institutions to oppose projects that use forced labor in the region.
Shein and Temu have been under scrutiny due to their ability to avoid certain import tariffs thanks to the de minimis provision of the Tariff Act of 1930. This provision exempts packages worth less than $800 from being reviewed. However, the Biden-Harris Administration plans to limit the types of goods that can be shipped under this exemption.
The proposed act also targets projects carried out by state-owned or heavily state-influenced entities. It mandates international financial institutions to explain their vetting process for forced labor risks and actions taken to mitigate, track, and reverse that risk.
The act has been a key factor in conversations around the compliance of fast fashion giants with labor laws. It has also played a role in investigating the use of forced labor in the products of these companies. However, it's important to note that there is no publicly available evidence that current international financial institutions are supporting projects in the Xinjiang region that pose a significant risk of forced labor.
The UFLPA has also been cited in discussions about halting a potential Shein IPO. The legislation targets the de minimis provision, which could impact the sourcing strategies of fast fashion giants like Shein and Temu.
Senators Marco Rubio and Jeff Merkley have introduced the No Funds for Forced Labor Act, adding another layer to the ongoing efforts to combat forced labor in the fashion industry and beyond. The bill, if passed, could mark a significant step forward in ensuring ethical and fair labor practices in the global supply chain.
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