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 I Overview of Uyghur Forced Labor Prevention Act What is a Uyghur Forced Labor Prevention Act? Key aspects of the Uyghur Forced Labor Prevention Act 2.1 Rebuttable presumption that imports from the XUAR are prohibited 2.2 Lists of entities, products, and sectors that rely on forced labor 2.3 Enforcement Plan 10 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 Overview 13 From 2022 to 2023 .14 In the future 16 III Strategic recommendation 17 Raising awareness about the Uyghur Forced Labor Prevention Act 17 Enhancing the effectiveness of the Uyghur Forced Labor Prevention Act 19 How can Vietnamese companies comply with the UFLPA? 21 CONCLUSION 23 REFERENCE 24 INTRODUCTION The global textile and apparel industry has been significantly impacted by legislative measures aimed at eradicating forced labor and unethical practices within supply chains Among these measures, the Uyghur Forced Labor Prevention Act, enacted in December 2021 by the United States, stands as a critical policy with profound implications for international trade, particularly affecting countries heavily involved in manufacturing, such as Vietnam Vietnam has been renowned for its prowess in textile and apparel production and the implementation of the Uyghur Forced Labor Prevention Act has introduced a paradigm shift, compelling Vietnamese manufacturers to reassess their operational strategies 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 the Uyghur Forced Labor Prevention Act on Vietnam's textile and apparel industry throughout 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 of this legislation, shedding light on its multifaceted consequences I Overview of Uyghur Forced Labor Prevention Act What is a Uyghur Forced Labor Prevention Act? On December 23, 2021, President Biden signed into law H.R 6256, known as the Uyghur Forced Labor Prevention Act (UFLP) The UFLP requires companies to avoid importing goods to the US that were made with the forced labor of Uyghurs and other persons or groups in China's Xinjiang Uyghur Autonomous Region (XUAR) The UFLPA is a direct response to reports of forced labor and human rights abuses in the Xinjiang region of China, where the majority of Uyghur Muslims are located 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 alleged abuses in the XUAR Since 2019, US Customs and Border Protection (CBP) has issued several Withhold Release Orders (WROs) against certain goods produced by specific companies in the region and, in January 2021, went as far as issuing a WRO against all cotton and tomato products from the region The UFLP also follows other state and federal regulations that have generally sought to restrict supply chain abuses For example, the California Transparency in Supply 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 of human trafficking and forced labor in their product supply chains As explained further below, however, the UFLP is much broader than these prior efforts The UFLP potentially clouds the import of all products that are derived from goods or services in the XUAR, and requires companies to take significant affirmative steps to overcome that presumption The UFLP will require many companies to first determine their supply chain links to XUAR and then, if such links exist, to prepare to reassure regulators that such links are not affected by forced labor 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 days after 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 labor and may not be imported to the US The act contains a de minimis exception, which means 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 and substantively" responding to all information requests from the FLETF Commissioner regarding 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 that use 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 lists described below are also subject to the above rebuttable presumption, regardless of whether 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 with forced 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) Name of Entity Effective Date Baoding LYSZD Trade and Business Co., Ltd June 21, 2022 Changji Esquel Textile Co Ltd (and one alias : Changji Yida Textile) June 21, 2022 Hetian Haolin Hair Accessories Co Ltd (and two aliases: Hotan June 21, Haolin Hair Accessories; and Hollin Hair Accessories) 2022 Hetian Taida Apparel Co., Ltd (and one alias: Hetian TEDA Garment) June 21, 2022 Hoshine Silicon Industry (Shanshan) Co., Ltd (including one alias: June 21, Hesheng Silicon Industry (Shanshan) Co.) and subsidiaries 2022 Xinjiang Daqo New Energy, Co Ltd (including three aliases: Xinjiang June 21, Great New Energy Co., Ltd.; Xinjiang Daxin Energy Co., Ltd.; and 2022 Xinjiang Daqin Energy Co., Ltd.) Xinjiang East Hope Nonferrous Metals Co Ltd (including one alias: June 21, Xinjiang Nonferrous) 2022 Xinjiang GCL New Energy Material Technology, Co Ltd (including June 21, one alias: Xinjiang GCL New Energy Materials Technology Co.) 2022 Xinjiang Junggar Cotton and Linen Co., Ltd June 21, 2022 Xinjiang Production and Construction Corps (including three aliases: June 21, XPCC; Xinjiang Corps; and Bingtuan) and its subordinate and 2022 affiliated entities Document continues below Discover more from: political economy PE111 Trường Đại học… 11 documents Go to course 221 29 Giao trinh khong chuyen KTCT lan political economy None đề tài ktct, kinh tế tri thức việt nam political economy None KTCT - Summary for Midterm test political economy None Theoretical Perspectives IN IPE political economy None Bài học Việt Nam rút từ mô hình công… political economy None IMC NHÓM CĐ4 TIỂU LUẬN 20 A list of entities working with the government of Xinjiang to recruit, transport, political economy 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) Name of Entity Effective Date Aksu Huafu Textiles Co (including two aliases: Akesu Huafu and June 21, Aksu Huafu Dyed Melange Yarn) 2022 Camel Group Co., Ltd August 2, 2023 Hefei Bitland Information Technology Co., Ltd (including three June 21, aliases: Anhui Hefei Baolongda Information Technology; Hefei 2022 Baolongda Information Technology Co., Ltd.; and Hefei Bitland Optoelectronic Technology Co., Ltd.) Hefei Meiling Co Ltd (including one alias: Hefei Meiling Group June 21, Holdings Limited) 2022 KTK Group (including three aliases: Jiangsu Jinchuang Group; June 21, Jiangsu Jinchuang Holding Group; and KTK Holding) 2022 Lop County Hair Product Industrial Park June 21, 2022 Lop County Meixin Hair Products Co., Ltd June 21, 2022 Nanjing Synergy Textiles Co., Ltd (including two aliases: Nanjing June 21, None Xinyi Cotton Textile Printing and Dyeing; and Nanjing Xinyi Cotton 2022 Textile) Ninestar Corporation and its eight Zhuhai-based subsidiaries, which June 12, include Zhuhai Ninestar Information Technology Co Ltd., Zhuhai 2023 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 No Vocation Skills Education Training Center (VSETC) June 21, 2022 Tanyuan Technology Co Ltd (including five aliases: Carbon Yuan June 21, Technology; Changzhou Carbon Yuan Technology Development; 2022 Carbon Element Technology; Jiangsu Carbon Element Technology; and Tanyuan Technology Development) Xinjiang Production and Construction Corps (XPCC) and its June 21, subordinate and affiliated entities 2022 Xinjiang Tianmian Foundation Textile Co., Ltd September 27, 2023 Xinjiang Tianshan Wool Textile Co Ltd September 27, 2023 Xinjiang Zhongtai Chemical Co Ltd June 12, 2023 Xinjiang Zhongtai Group Co Ltd September 27, 2023 The FLETF will also create a list of facilities and entities that source material from the XUAR This list will include entities and facilities that source material from persons working with the XUAR government or the Xinjiang Production and Construction Corps for purposes of any government labor scheme that uses forced labor, 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 ‘‘pairingassistance’’ program or any other government-labor scheme that uses forced labor Section 2(d)(2)(B)(v) Entity Name Effective Date Baoding LYSZD Trade and Business Co., Ltd June 21, 2022 Chenguang Biotech Group Co., Ltd and its subsidiary Chenguang August 2, Biotechnology Group Yanqi Co Ltd 2023 Hefei Bitland Information Technology Co Ltd June 21, 2022 Hetian Haolin Hair Accessories Co Ltd June 21, 2022 Hetian Taida Apparel Co., Ltd June 21, 2022 are now more vigilant in monitoring their supply chains, conducting thorough audits, and demanding greater transparency from suppliers to ensure compliance with labor standards 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 on goods 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 supply chains, compelling businesses to reevaluate their sourcing strategies, adopt more stringent due diligence practices, and promote greater transparency to ensure compliance with labor standards and ethical practices II Evaluate the influence of Uyghur Forced Labor Prevention Act on Vietnam textile export and apparel industry Overview The Uyghur Forced Labor Prevention Act is poised to exert a multifaceted impact on Vietnam's exports to the USA Beyond the direct implications on supply chains, there are several broader consequences that businesses need to consider One significant area of concern lies in the potential reputational risks for companies associated with supply chains linked to forced labor This could translate into damaged brand image and influence consumer perceptions, potentially impacting market share and competitiveness Moreover, the Act introduces the prospect of increased regulatory compliance costs for Vietnamese exporters To align with the legislation's requirements, companies may need to invest in comprehensive supply chain audits, meticulous documentation processes, and potentially reevaluate and restructure their sourcing strategies Practical challenges at the operational level are also likely There might be heightened scrutiny at U.S customs, leading to potential delays and administrative complexities for Vietnamese exporters Compliance issues could result in goods being 12 held at customs or, in more severe cases, facing rejection, thereby impacting market access The Act's implications extend beyond operational considerations to influence broader trade relations Diplomatic discussions and trade negotiations between the U.S and Vietnam may be influenced by concerns related to human rights and forced labor practices, affecting the overall bilateral relationship Furthermore, the global supply chain landscape may witness shifts as companies seek to avoid Xinjiang-related controversies If Vietnam positions itself as a reliable and compliant alternative, it could attract businesses looking to diversify their supply chains away from Xinjiang Finally, the Act's impact may vary across different industries within Vietnam Sectors heavily reliant on specific materials from Xinjiang may face more substantial challenges compared to those with diversified supply chains Navigating these complexities will require a nuanced approach to ensure compliance, mitigate risks, and maintain a competitive edge in the U.S market From 2022 to 2023 The Uyghur Forced Labor Prevention Act (UFLPA) is poised to intricately influence Vietnam's textile and apparel industry As an integral part of the global supply chain, this sector may encounter substantial shifts, starting with potential disruptions due to the Act's implications for supply chains connected to Xinjiang Vietnam's textile and apparel businesses face heightened scrutiny, necessitating rigorous due diligence processes and audits to adhere to UFLPA standards The associated compliance costs are expected to rise as companies invest in comprehensive measures to guarantee their supply chains are devoid of forced labor, aligning with the legislation's stringent requirements Vietnam textile and apparel exports in calendar year 2022 (CY22) are expected to reach $43 billion, a 10 percent growth year on year, despite sharp declines in both orders and value during the fourth quarter of CY22 (Q4/22), according to the Vietnam Textile and Apparel Association (VITAS) Orders in Q4/22 plummeted by up to 50 percent over Q2/22 The Vietnam textile industry expects this downward trend to 13 continue over the next two quarters due to weakening demand in key markets, including the United States and the European Union (EU) While logistical issues, including port congestion, container shortages, and high ocean freights have gradually eased, emerging challenges such as large inventories, high inflation, and economic uncertainty in the U.S and EU markets have hurt Vietnam textile and apparel exports Despite concerns on a global economic downturn, which would weaken purchasing power, VITAS continues to set positive export goals for 2023, valued from $46 billion to $48 billion, noting that this target is subject to a recovery in global demand (Source: Vietnam Customs, Vietnam Textile and Apparel Association’s estimate and forecast) Market access challenges loom large, particularly if products are perceived to have ties to forced labor in Xinjiang This could potentially hinder the industry's competitiveness in markets strictly enforcing the UFLPA Reputational risks are heightened, as any association with forced labor may tarnish the industry's image, impacting consumer trust and market perception globally Vietnam’s exports to the United States have come under closer scrutiny by U.S Customs and Border officials since a law preventing material or products made by forced labor in China took effect in June 2022 U.S Customs and Border Protection, or CBP, said nearly 1,200 shipments of imported goods from Vietnam were denied clearance from June 2022 when the U.S Uyghur Forced Labor Protection Act, or UFLPA, went into effect, to the start of fiscal year 2024 The law prohibits imports of raw material and products or components made by forced labor in China’s Xinjiang Uyghur Autonomous Region into the United States 14 The U.S government has declared that genocide and crimes against humanity against Muslim Uyghurs have occurred in Xinjiang, including mass detentions of Muslim Uyghurs and other Turkic minorities in “re-education” camps or prisons and the use of forced labor Uyghur forced labor has been used to produce cotton for clothing and polysilicon for photovoltaic panels and semiconductors China has consistently denied the accusations of rights abuses in Xinjiang Vietnam currently has the second-largest number of shipments denied entry to the U.S after Malaysia since the UFLPA has been enforced The tighter rules on tackling human rights violations in Xinjiang have led to controls on more than 6,000 shipments carrying goods worth more than US$2 billion through September, the latest month for which U.S customs data are available, Reuters reported CPB authorities examined more than 2,000 total shipments from Vietnam valued at nearly US$549 million, of which 1,186 shipments worth more than US$230 million were denied entry, 554 shipments were released, and 330 shipments were still pending as of Nov 8, according to the CPB’s latest data Most of the shipments - 962 - were electronics worth over US$488 million Other shipments involved were industrial and manufacturing materials; apparel, footwear and textiles; consumer products; and machinery Of this amount, 376 shipments were denied, 438 were released, and 148 were pending With 140 shipments worth over US$46 million rejected, August 2022 saw the highest number of shipments from Vietnam denied entry to the U.S., according to the data More than two-thirds of rejected or held cargo in the U.S came from Vietnam and Malaysia, major exporters of solar panels and semiconductors, Reuters reported Neither Vietnam’s nor Malaysia’s trade ministries replied to Reuters’ requests for comment 15 In the future The Uyghur Forced Labor Prevention Act, in its potential influence on Vietnam's exports, could instigate a comprehensive reassessment of supply chain practices This may involve heightened diligence in scrutinizing not only direct suppliers but also secondary and tertiary contributors to the production process The compliance landscape may evolve, necessitating more rigorous documentation and verification processes to ensure products are devoid of any association with forced labor, particularly in regions like Xinjiang Market access, a critical factor for Vietnam's export-driven economy, might encounter hurdles as countries enforcing the act may impose stringent restrictions on goods lacking clear proof of ethical sourcing Consequently, Vietnamese businesses may find it imperative to proactively engage in supply chain transparency, potentially exploring technological solutions for traceability This multifaceted impact underscores the need for strategic adaptation and a proactive approach to navigate the evolving global trade environment Moreover, the Uyghur Forced Labor Prevention Act could trigger a paradigm shift in corporate responsibility, compelling Vietnamese exporters to prioritize ethical labor practices The act's implications may extend beyond immediate trade concerns, influencing investor perceptions and financial markets Vietnamese companies that demonstrate commitment to eradicating forced labor from their supply chains could gain a competitive edge, appealing to conscientious consumers and investors alike Collaborative efforts within industries to establish and adhere to standardized ethical sourcing practices may emerge as a strategic response However, challenges may arise in terms of the initial costs associated with overhauling supply chain procedures and ensuring compliance with evolving international standards Navigating these complexities will be essential for Vietnam's exporters to not only maintain their current market share but also tap into emerging opportunities in a global economy increasingly focused on ethical and sustainable business practices 16 III Strategic recommendation Raising awareness about the Uyghur Forced Labor Prevention Act To strategically raise awareness about the Uyghur Forced Labor Prevention Act, a multifaceted approach is essential Educational campaigns will play a pivotal role, disseminating comprehensive information through diverse media channels to reach businesses, consumers, and the broader public Collaborative efforts with industry associations and advocacy groups will amplify the impact, fostering a unified front across sectors Engaging government agencies is crucial, integrating Act-related content into trade communication and guidelines Leveraging social media platforms for targeted campaigns, involving influencers and organizations, will maximize visibility and engagement Practical initiatives include developing training programs for businesses and stakeholders, offering resources for compliance and responsible practices Encouraging transparency in supply chains through certification programs or labels certifying products as Uyghur forced labor-free enhances consumer awareness Participation in global forums facilitates the exchange of best practices and fosters a collective commitment to preventing forced labor Academic partnerships contribute by conducting research, producing white papers, and hosting seminars that delve into the ethical considerations and human rights implications of the Act This seamless integration of strategies ensures a comprehensive and impactful awareness campaign In executing educational campaigns, tailor content to highlight the Uyghur Forced Labor Prevention Act's specific provisions, emphasizing its global implications and the need for corporate responsibility Utilize a mix of infographics, videos, and articles to cater to diverse learning preferences Collaborate with influential figures, experts, and organizations for thought leadership pieces, webinars, and panel discussions, fostering a deeper understanding of the Act's nuances Forge industry partnerships by establishing working groups that regularly convene to share insights, challenges, and best practices Develop practical toolkits that businesses can integrate into their operations, offering step-by-step guidance on auditing supply chains, conducting risk assessments, and implementing corrective actions 17 With government engagement, advocate for the incorporation of Uyghur Forced Labor Prevention Act guidelines into trade policies, ensuring a consistent and supportive regulatory environment Encourage the creation of reporting mechanisms that facilitate transparency and enable stakeholders to monitor and verify compliance On social media, employ data analytics to target key demographics, maximizing the reach of the campaign Engage influencers who align with ethical and humanitarian values to amplify the message and encourage businesses to publicly commit to the principles of the Act In training programs, provide case studies illustrating successful implementation of ethical supply chain practices, reinforcing the tangible benefits for businesses Establish an online platform with resources, FAQs, and interactive modules, creating a centralized hub for ongoing education Certification programs and labels should undergo rigorous development, incorporating third-party verification to ensure credibility Collaborate with consumer protection groups to promote these labels and emphasize their role in empowering consumers to make socially responsible choices Global forums should include diverse perspectives, incorporating voices from impacted communities, NGOs, and businesses Facilitate working sessions to address challenges, share real-world experiences, and cultivate a supportive network for ongoing collaboration Academic partnerships could involve funding research projects that delve into the broader context of forced labor, examining historical, economic, and geopolitical factors Establish scholarships or awards to incentivize students to contribute innovative solutions to address forced labor challenges This detailed approach ensures a comprehensive and impactful awareness campaign, addressing the complexity of the Uyghur Forced Labor Prevention Act and promoting sustained engagement across various stakeholders Enhancing the effectiveness of the Uyghur Forced Labor Prevention Act To enhance the effectiveness of the Uyghur Forced Labor Prevention Act (UFLPA) on a global scale, it's crucial to initiate a comprehensive supply chain 18