(Tiểu luận) impact of the uyghur forced labor preventionact on vietnam’s textile and apparel industry

Evaluate the influence of Uyghur Forced Labor Prevention Act on Vietnam textile export and apparel industry.... 23 Trang 3 The global textile and apparel industry has been significantly

FOREIGN TRADE UNIVERSITY

DEPT OF POSTGRADUATES STUDIES

-o0o -MID-TERM ESSAY Class: International Political Economy

IMPACT OF THE UYGHUR FORCED LABOR PREVENTION ACT ON VIETNAM’S TEXTILE AND APPAREL INDUSTRY

Full name: Nguyen Thi Khanh Linh – 823098 – MIPL11A

Duong Cam Tu – 821114 – MITPL9A

Lecturer: Dr Dinh Thi Thanh Binh

Hanoi, December 2023

Table of Contents

INTRODUCTION 2

I Overview of Uyghur Forced Labor Prevention Act 3

1 What is a Uyghur Forced Labor Prevention Act? 3

2 Key aspects of the Uyghur Forced Labor Prevention Act 3

2.1 Rebuttable presumption that imports from the XUAR are prohibited 3

2.2 Lists of entities, products, and sectors that rely on forced labor 4

2.3 Enforcement Plan 10

3 The impact of UFLPA on global supply chains 12

II Evaluate the influence of Uyghur Forced Labor Prevention Act on Vietnam textile export and apparel industry 13

1 Overview 13

2 From 2022 to 2023 14

3 In the future 16

III Strategic recommendation 17

1 Raising awareness about the Uyghur Forced Labor Prevention Act 17

2 Enhancing the effectiveness of the Uyghur Forced Labor Prevention Act 19

3 How can Vietnamese companies comply with the UFLPA? 21

CONCLUSION 23

REFERENCE 24

The global textile and apparel industry has been significantly impacted bylegislative measures aimed at eradicating forced labor and unethical practices withinsupply chains Among these measures, the Uyghur Forced Labor Prevention Act,enacted in December 2021 by the United States, stands as a critical policy withprofound implications for international trade, particularly affecting countries heavilyinvolved in manufacturing, such as Vietnam

Vietnam has been renowned for its prowess in textile and apparel productionand the implementation of the Uyghur Forced Labor Prevention Act has introduced aparadigm shift, compelling Vietnamese manufacturers to reassess their operationalstrategies to comply with stringent regulations targeting forced labor practices,especially those associated with the Xinjiang region of China

This paper seeks to comprehensively explore and analyze the impact of theUyghur Forced Labor Prevention Act on Vietnam's textile and apparel industrythroughout the period spanning 2022 to 2023 By examining this specific timeframe,

we aim to capture the evolving dynamics and the industry's response in the wake ofthis legislation, shedding light on its multifaceted consequences

1 What is a Uyghur Forced Labor Prevention Act?

On December 23, 2021, President Biden signed into law H.R 6256, known asthe Uyghur Forced Labor Prevention Act (UFLP) The UFLP requires companies toavoid importing goods to the US that were made with the forced labor of Uyghurs andother persons or groups in China's Xinjiang Uyghur Autonomous Region (XUAR) The UFLPA is a direct response to reports of forced labor and human rightsabuses in the Xinjiang region of China, where the majority of Uyghur Muslims arelocated Specifically relevant to fashion and retail brands, the abuses include instances

of imprisonment in "transformation" camps and forced labor in factories

The UFLP follows a number of other US executive actions targeting allegedabuses in the XUAR Since 2019, US Customs and Border Protection (CBP) hasissued several Withhold Release Orders (WROs) against certain goods produced byspecific companies in the region and, in January 2021, went as far as issuing a WROagainst all cotton and tomato products from the region

The UFLP also follows other state and federal regulations that have generallysought to restrict supply chain abuses For example, the California Transparency inSupply Chains Act (TSCA) of 2010 requires certain large retailers and manufacturers

to publicly disclose any efforts they are taking to identify and eliminate the use ofhuman trafficking and forced labor in their product supply chains

As explained further below, however, the UFLP is much broader than theseprior efforts The UFLP potentially clouds the import of all products that are derivedfrom goods or services in the XUAR, and requires companies to take significantaffirmative steps to overcome that presumption The UFLP will require manycompanies to first determine their supply chain links to XUAR and then, if such linksexist, to prepare to reassure regulators that such links are not affected by forced labor

2 Key aspects of the Uyghur Forced Labor Prevention Act

2.1 Rebuttable presumption that imports from the XUAR are prohibited

Section three of the UFLP creates a presumption—which takes effect 180 daysafter the UFLP's enactment—that goods, wares, articles, and merchandise mined,produced, or manufactured wholly or in part in the XUAR are made with forced laborand may not be imported to the US The act contains a de minimis exception, whichmeans that if any part of the good, no matter how small, is produced in the XUAR or

by identified entities, the final product will be subject to the rebuttable presumption

A US importer may rebut this presumption in two ways:

First, by fully complying with the Forced Labor Enforcement Task Force's(FLETF) forthcoming regulations and guidance to importers and by "completely andsubstantively" responding to all information requests from the FLETF Commissionerregarding the use of forced labor

Second, establishing "by clear and convincing evidence" that an imported good,ware, article, or merchandise was not made with any forced labor

2.2 Lists of entities, products, and sectors that rely on forced labor

The UFLP requires the FLETF to create lists identifying various entities thatuse or rely on the forced labor of Uyghurs and other persecuted groups in China,especially in the XUAR Goods produced by entities appearing on any of the listsdescribed below are also subject to the above rebuttable presumption, regardless ofwhether they are produced inside or outside of the XUAR

In particular, FLETF created a list of entities in the XUAR that mine, produce,

or manufacture wholly or in part any goods, wares, articles, and merchandise withforced labor as well as entities working with the government of the XUAR to recruit,transport, transfer, harbor, or receive forced labor

A list of entities in Xinjiang that mine, produce, or manufacture wholly or

in part any goods, wares, articles and merchandise with forced labor

Section 2(d)(2)(B)(i)

Date

Baoding LYSZD Trade and Business Co., Ltd June 21,

2022Changji Esquel Textile Co Ltd (and one alias : Changji Yida Textile) June 21,

2022Hetian Haolin Hair Accessories Co Ltd (and two aliases: Hotan

Haolin Hair Accessories; and Hollin Hair Accessories)

June 21, 2022Hetian Taida Apparel Co., Ltd (and one alias: Hetian TEDA Garment) June 21,

2022Hoshine Silicon Industry (Shanshan) Co., Ltd (including one alias:

Hesheng Silicon Industry (Shanshan) Co.) and subsidiaries

June 21, 2022

Xinjiang Daqo New Energy, Co Ltd (including three aliases: Xinjiang

Great New Energy Co., Ltd.; Xinjiang Daxin Energy Co., Ltd.; and

Xinjiang Daqin Energy Co., Ltd.)

June 21, 2022

Xinjiang East Hope Nonferrous Metals Co Ltd (including one alias:

Xinjiang Nonferrous)

June 21, 2022Xinjiang GCL New Energy Material Technology, Co Ltd (including

one alias: Xinjiang GCL New Energy Materials Technology Co.)

June 21, 2022

Xinjiang Junggar Cotton and Linen Co., Ltd June 21,

2022Xinjiang Production and Construction Corps (including three aliases:

XPCC; Xinjiang Corps; and Bingtuan) and its subordinate and

affiliated entities

June 21, 2022

đề tài ktct, kinh tế tri thức ở việt nampolitical

29

KTCT - Summary for Midterm test

A list of entities working with the government of Xinjiang to recruit, transport, transfer, harbor or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or

members of other persecuted groups out of Xinjiang

Section 2(d)(2)(B)(ii)

Date

Aksu Huafu Textiles Co (including two aliases: Akesu Huafu and

Aksu Huafu Dyed Melange Yarn)

June 21, 2022

2023Hefei Bitland Information Technology Co., Ltd (including three

aliases: Anhui Hefei Baolongda Information Technology; Hefei

Baolongda Information Technology Co., Ltd.; and Hefei Bitland

Optoelectronic Technology Co., Ltd.)

June 21, 2022

Hefei Meiling Co Ltd (including one alias: Hefei Meiling Group

Holdings Limited)

June 21, 2022KTK Group (including three aliases: Jiangsu Jinchuang Group;

Jiangsu Jinchuang Holding Group; and KTK Holding)

June 21, 2022Lop County Hair Product Industrial Park June 21,

2022Lop County Meixin Hair Products Co., Ltd June 21,

2022Nanjing Synergy Textiles Co., Ltd (including two aliases: Nanjing June 21,

political

IMC NHÓM CĐ4 TIỂU LUẬN

political

20

Xinyi Cotton Textile Printing and Dyeing; and Nanjing Xinyi Cotton

Textile)

2022

Ninestar Corporation and its eight Zhuhai-based subsidiaries, which

include Zhuhai Ninestar Information Technology Co Ltd., Zhuhai

Pantum Electronics Co Ltd., Zhuhai Apex Microelectronics Co., Ltd.,

Geehy Semiconductor Co., Ltd., Zhuhai Pu-Tech Industrial Co., Ltd.,

Zhuhai G&G Digital Technology Co., Ltd., Zhuhai Seine Printing

Technology Co., Ltd., and Zhuhai Ninestar Management Co., Ltd

June 12, 2023

No 4 Vocation Skills Education Training Center (VSETC) June 21,

2022Tanyuan Technology Co Ltd (including five aliases: Carbon Yuan

Technology; Changzhou Carbon Yuan Technology Development;

Carbon Element Technology; Jiangsu Carbon Element Technology;

and Tanyuan Technology Development)

June 21, 2022

Xinjiang Production and Construction Corps (XPCC) and its

subordinate and affiliated entities

June 21, 2022Xinjiang Tianmian Foundation Textile Co., Ltd September

27, 2023Xinjiang Tianshan Wool Textile Co Ltd September

27, 2023Xinjiang Zhongtai Chemical Co Ltd June 12,

2023Xinjiang Zhongtai Group Co Ltd September

27, 2023

The FLETF will also create a list of facilities and entities that source materialfrom the XUAR This list will include entities and facilities that source material frompersons working with the XUAR government or the Xinjiang Production andConstruction Corps for purposes of any government labor scheme that uses forcedlabor, such as the "poverty alleviation" and "pairing-assistance" programs.

A list of facilities and entities, including the Xinjiang Production and Construction Corps, that source material from Xinjiang or from persons working with the government of Xinjiang or the Xinjiang Production and Construction Corps for purposes of the ‘‘poverty alleviation’’ program or the ‘‘pairing- assistance’’ program or any other government-labor scheme that uses forced

labor Section 2(d)(2)(B)(v)

Date

Baoding LYSZD Trade and Business Co., Ltd June 21,

2022Chenguang Biotech Group Co., Ltd and its subsidiary Chenguang

Biotechnology Group Yanqi Co Ltd

August 2, 2023Hefei Bitland Information Technology Co Ltd June 21,

2022Hetian Haolin Hair Accessories Co Ltd June 21,

2022Hetian Taida Apparel Co., Ltd June 21,

2022

Hoshine Silicon Industry (Shanshan) Co., Ltd., and Subsidiaries June 21,

2022Xinjiang Junggar Cotton and Linen Co., Ltd June 21,

2022Lop County Hair Product Industrial Park June 21,

2022Lop County Meixin Hair Products Co., Ltd June 21,

2022

No 4 Vocation Skills Education Training Center (VSETC) June 21,

2022Xinjiang Production and Construction Corps (XPCC) and its

subordinate and affiliated entities

June 21, 2022Yili Zhuowan Garment Manufacturing Co., Ltd June 21,

2022

Additionally, the UFLPA required the Strategy to include a list of high-prioritysectors for enforcement Under the Act, the high-priority sectors must include cotton,tomatoes and polysilicon As framed in the Strategy, the high-priority sectors forenforcement are (1) apparel; (2) cotton and cotton products; (3) silica-based products(including polysilicon); and (4) tomatoes and downstream products

2.3 Enforcement Plan

In order to ensure goods from the high-priority sectors are kept from enteringthe country, the act includes an enforcement strategy The Forced Labor EnforcementTask Force (FLETF) was created to comply with Section 741 of the United States-Mexico-Canada Agreement Implementation Act It is the governing body created to

ensure the United States does not import goods produced by forced labor To enforcethe UFLPA, the Forced Labor Enforcement Task Force must create an enforcementstrategy for each high-priority sector Each sector must have its own plan.

U.S Customs and Border Protection (CBP) released UFLPA operationalguidance in June 2022 to explain how it will identify Xinjiang goods and enforce theUFLPA:

CBP must apply a presumption that imports of all goods, wares, articles, andmerchandise mined, produced, or manufactured wholly or in part in theXinjiang Uyghur Autonomous Region (Xinjiang) of the People’s Republic ofChina (PRC), or by entities identified by the U.S government on the UFLPAEntity List, are presumed to be made with forced labor and are prohibited fromentry into the United States

The presumption also applies to goods made in, or shipped through, the PRCand other countries that include inputs made in Xinjiang

The presumption is rebuttable, and, to overcome it, importers must, amongother requirements in the UFLPA, respond to all CBP requests for informationabout merchandise under CBP review and demonstrate by clear and convincingevidence that the good, ware, article, or merchandise was not mined, produced,

or manufactured wholly or in part by forced labor

The UFLPA also requires that importers demonstrate due diligence, effectivesupply chain tracing, and supply chain management measures to ensure thatthey do not import any goods made, in whole or in part, by forced labor,especially from the Xinjiang Region This requirement extends throughout theentire supply chain, to include goods that may be shipped from elsewhere in thePRC and to third countries for further processing

According to CBP operational guidance, CBP will enforce the UFLPA bytaking specific enforcement actions, including identifying, detaining, and/or excluding,

or seizing shipments subject to the UFLPA’s rebuttable presumption, depending uponthe specific facts involved in each importation CBP will review each shipment for

UFLPA applicability, and appropriate action to be taken, on a case-by-case basis.CBP will provide importers with notice, in accordance with the customs laws,when enforcement actions are taken on their shipments In response to a detentionnotice, exclusion notice, or notice of seizure, an importer may provide information toCBP to request an exception to the UFLPA’s rebuttable presumption.

To grant an exception, CBP may require importers to provide documentationfrom these categories:

Due diligence system information

Supply chain tracing information

Information on supply chain management measures

Evidence goods were not mined, produced, or manufactured wholly or in part inthe Xinjiang Uyghur Autonomous Region

Importers may also identify additional shipments that have identical supplychains to those that have been reviewed previously and determined to be admissible byCBP, to facilitate the faster release of identical shipments

3 The impact of UFLPA on global supply chains

Disruption of Supply Chains: The UFLPA has disrupted established supply

chains, particularly in industries heavily reliant on inputs from the Xinjiang region.Companies using raw materials or products originating from Xinjiang, such as cotton,textiles, apparel, electronics, and solar panels, have faced challenges in sourcingalternative suppliers outside the region

Diversification of Supply Sources: To comply with the UFLPA and mitigate

the risks associated with sourcing from Xinjiang, many companies have undertakenefforts to diversify their supply chains This has involved seeking alternative suppliersfrom different regions or countries to ensure transparency and ethical practices in theirsupply networks

Increased Scrutiny and Due Diligence: The Act has prompted heightened

scrutiny and increased due diligence measures among businesses globally Companies

are now more vigilant in monitoring their supply chains, conducting thorough audits,and demanding greater transparency from suppliers to ensure compliance with laborstandards and to avoid inadvertent connections to forced labor in Xinjiang.

Shifts in Trade Patterns: The UFLPA has led to shifts in trade patterns, with

countries and companies reevaluating their trade relationships and dependencies ongoods produced in Xinjiang Some nations have implemented stricter import controls

or adjusted trade agreements to minimize exposure to products linked to forced labor

in the region

In summary, the UFLPA has triggered a significant overhaul of global supplychains, compelling businesses to reevaluate their sourcing strategies, adopt morestringent due diligence practices, and promote greater transparency to ensurecompliance with labor standards and ethical practices

II Evaluate the influence of Uyghur Forced Labor Prevention Act on Vietnam textile export and apparel industry

1 Overview

The Uyghur Forced Labor Prevention Act is poised to exert a multifacetedimpact on Vietnam's exports to the USA Beyond the direct implications on supplychains, there are several broader consequences that businesses need to consider.One significant area of concern lies in the potential reputational risks forcompanies associated with supply chains linked to forced labor This could translateinto damaged brand image and influence consumer perceptions, potentially impactingmarket share and competitiveness

Moreover, the Act introduces the prospect of increased regulatory compliancecosts for Vietnamese exporters To align with the legislation's requirements,companies may need to invest in comprehensive supply chain audits, meticulousdocumentation processes, and potentially reevaluate and restructure their sourcingstrategies

Practical challenges at the operational level are also likely There might beheightened scrutiny at U.S customs, leading to potential delays and administrativecomplexities for Vietnamese exporters Compliance issues could result in goods being