New Law to Block Forced Labor Goods From China Now in Effect

Plus: Talks continue on gun legislation.

Published June 21, 2022

Good morning. Odds are you’ve heard the Schoolhouse Rock song about how a bill becomes a law. And as long as you’ve followed the news, you’ve almost certainly watched high-profile bills wind their way through the legislative process at various times: The Affordable Care Act, the 2017 tax cuts, various spending bills each year.

But what about the important bills that don’t get much press coverage while lawmakers are debating them?

How the Uyghur Forced Labor Prevention Act Became Law

Each day this week, we’re publishing installments of a story I’ve been pulling together for about six months: a history of how the Uyghur Forced Labor Prevention Act became law. The most important component of the law—a presumption that all goods produced in part or in whole in China’s northwest Xinjiang region are tainted by forced labor and cannot be allowed into the United States—goes into effect today.

The law is the most meaningful American response to the genocide in Xinjiang to date. It touches hundreds of billions of dollars in trade, and it provides an example for other countries considering how to respond to China’s genocide of ethnic minorities.

It is also the most consequential China-related legislation in more than two decades, breaking the trend of the business community gatekeeping China policy.

The story we’re publishing this week is based on more than 21 hours of interviews with over two dozen people involved, including lawmakers, congressional aides, and human rights advocates. It provides an up-close look at the legislative process, and how a bill of this magnitude came together despite opposition from corporations and factions in the White House.

Yesterday, we published the introduction and the first part of the story. You can read it here.

Today, we published the next two sections: one focusing on the business community’s pushback to the legislation when it was first introduced and another examining how corporations are thinking about monumental shifts in just the past five years.

We’ll excerpt a bit of those sections here, before getting into what’s happening on Capitol Hill this week.

A week after lawmakers introduced the Uyghur Forced Labor Prevention Act, staff on the Congressional-Executive Commission on China had a call with government affairs representatives for Coca-Cola. The conversation was, in the words of one participant, a bloodbath.

Under scrutiny was Coca-Cola’s relationship with a Chinese state-run company that sells sugar, COFCO Tunhe. It has a Xinjiang location with alleged ties to forced labor. Coca-Cola’s representatives claimed a clean third-party audit proved there was no forced labor involved—yet they couldn’t answer the CECC staff’s questions about how the audit had been carried out, like if they had spoken with workers without supervision by company managers or Chinese officials.

The Coca-Cola representatives said they might be able to share the audit with the commission after the meeting, but they never did.

Early on, aides say the bill wasn’t exactly on the corporate community’s radar as something that would ultimately pass.

Lobbyists who reached out to staff soon after the bill’s introduction were primarily focused on public image concerns. The first version contained findings that called out major brands for being implicated in using forced labor. A handful of those companies, including Coca-Cola, made a push to have their names removed from the legislative text. Lobbyists also raised broader concerns about supply chain complexities and the bill’s SEC disclosure requirements.

They were usually careful to strike a balance in their remarks to CECC staff instead of outright opposing the bill, even if that was what they intended.

“Their statements were always like, ‘Well, we believe in the point of the bill, we just, you know …’” one aide remembers. “It was always a little short of they were opposing it. But they were opposing it.”

According to Rep. Jim McGovern, some members asked before the first House vote that the bill be advanced under expedited procedures, without a recorded tally.

“It’s not difficult to get people to talk the talk,” he says. “But to be truthful, there are some members of Congress who, when it comes to trying to sanction China, they have lots of business interests and others that are in their districts that would prefer not to walk the walk: ‘I’m okay with your statements, don’t go any further.’ Here’s where I give Nancy Pelosi a lot of credit, whether it’s Tibet or Uyghurs. Even when we brought some of this legislation forward, they would say, ‘Can we just do it by voice vote? We don’t want a recorded vote.’ Absolutely not. We’re all going to be on record.”

Sen. Marco Rubio describes fighting against the lobbying campaign as “boxing a ghost.”

Other than a U.S. Chamber of Commerce letter opposing the bill when the House considered it the first time, he says, groups that took issue with the legislation mostly kept it private. After all, openly rejecting a response to genocide isn’t good optics. Still, lawmakers felt the opposition.

“They clearly were making their argument both to the White House and to others about how this would impact the bottom line and how this would be bad for American businesses,” Rubio remembers. “But it wasn’t frontal. So it was difficult to take it on. They weren’t putting out press releases or giving out handouts … We couldn’t see it. You knew it was happening, but you couldn’t put your arms around it because it was covert.”

The second half of today’s installment delves into how companies are grappling with massive shifts in the China dynamic.

As the genocide continues and as China’s disruptive pandemic lockdowns have clarified the risks of doing business in a totalitarian state, some companies are seriously investigating how to go about moving their supply chains. It’s a delicate process. Manufacturers have to find reliable and experienced suppliers in other countries. Companies also fear ending up on bad terms with Chinese officials.

Without the Chinese government’s help, it can be even more difficult to avoid having intellectual property, product molds, and company tools stolen by suppliers. And with a slumping economy, the Chinese government is increasingly sensitive about companies pulling out of the country, making those conversations even more stressful.

International law firm Harris Bricken has held expert webinars in recent months for companies to learn more about moving supply chains out of China.

The conversations are filled with questions about how to navigate tense relations with Chinese officials and reduce the costs of moving. During the calls, experts have also grappled with the fact that no other country is going to present the same landscape China did as it opened up in the 1990s and the years since.

“China was a very unique historic situation, where you had a number of events converging to really drive this global productivity over the past 30 years, plus or minus,” Warren Wisnewski, the Eastman Kodak Company’s former vice president of operations for the Asian Pacific Region, told participants during a call in late May.

“You had this huge emerging market that attracted investors for the market. You had, for at least for a period of time, a seemingly bottomless pit of very cost-effective labor, and with all that, all the secondary and tertiary supply capabilities developing over time. I don’t believe, personally, that that is ever going to happen again. There will not be another new China.”

During the same conversation, Dan Harris, an attorney who assists companies dealing with suppliers in China and other markets abroad, said that there has been a “decoupling between China and much of the rest of the world.”

“That is going to continue,” Harris said. He pointed to a new trove of evidence about the genocide in Xinjiang, released by researcher Adrian Zenz the same morning as the webinar.

Youming Ye, former managing director of the Jordan Company China, was blunt about the situation: “China is fighting with the whole world,” he said. “We just witnessed a big country rise and fall, to some degree.”

For the sake of space in this newsletter, we’ll leave it at that for now. For more behind-the-scenes reporting about the legislative process and how companies are grappling with these issues, read the rest of the second installment in the series here.

On the Floor

This week, the House will consider the Senate-passed version of a bill expanding health care for veterans who were exposed to toxic burn pits during their service.

Members will also vote on a bipartisan gun safety bill: We wrote to you recently about a measure to develop emergency alert systems for active shooter situations. The House is scheduled to consider that bill this week, with leaders anticipating an overwhelming vote to pass it. A full list of the bills members may consider this week is available here.

A bipartisan group of senators is hoping to finalize the legislative text of a gun violence prevention bill, with a potential vote as soon as this week if they can work out their differences.

Key Hearings

The January 6 committee will hold a hearing to unveil more of its findings this afternoon. Information and livestream here. The panel will hold another hearing Thursday afternoon. Information and livestream for that one here.

The House Science, Space, and Technology subcommittee on energy has an ambitious hearing scheduled for Wednesday morning, titled “Investigating the Nature of Matter, Energy, Space, and Time.” We hope they get to the bottom of it. Information and livestream here.

National Football League Commissioner Roger Goodell and Washington Commanders CEO Dan Snyder will appear before the House Oversight and Reform Committee on Wednesday morning for a hearing on the NFL’s handling of workplace misconduct. Information and livestream here.

Break out the energy drinks: The House Armed Services Committee is scheduled to mark up the annual National Defense Authorization Act on Wednesday morning. Information and livestream here.

The House Administration Committee will hold a hearing Wednesday afternoon on how disinformation damages American democracy. Information and livestream here.

The Senate Banking, Housing, and Urban Affairs Committee will hear from Federal Reserve Chair Jerome Powell on monetary policy Wednesday morning. Information and livestream here.

Senators on the committee that deals with education will meet Wednesday morning for a hearing on helping get schools and students back on track after the pandemic. Information and livestream here.

The Senate Foreign Relations Committee will meet Wednesday afternoon for a hearing on adding Sweden and Finland to NATO. Information and livestream here.