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Human Rights Continues To Play Role In China Trade At Commerce

October 07, 2020

By Kenneth Rapoza, CPA Industry Analayst

First reported by subscriber service World Trade Online, the US government wants to make labor rights an increasing part of good trade relations. But will the Davos crowd pay attention?

Human rights will continue to be another way to hit back at multinationals using forced labor in Western China. This isn't going away no matter who wins the election this year.

The Commerce Department’s Bureau of Industry and Security (BIS) on Tuesday finalized an amendment to its export control rules that will expand its ability to block all products made by forced labor, World Trade Online reported yesterday.

The move is geared towards supporting the Trump administration's trade related policies targeting businesses using the forced labor of Uyghur Muslims in Xinjiang province, China. China is holding tens of thousands of Uyghurs and other ethnic minorities in detention facilities, some of which are used for -- as Beijing describes them -- re-education camps to reform radical religious minds.

US Customs and Border Protection last month issued five Withhold-Release Orders to prevent goods made with Uyghur forced labor from entering the US, bringing the total number of WROs against Xinjiang companies to nine.

As it is, BIS has already added 32 Chinese companies to the Entity List, which bans American firms from selling to them without government consent.  

"It is great to see the government continue to take an active role in addressing these crimes against humanity, but corporate leaders must also step up and take a stand," says Jon Toomey, director of government relations for CPA. "It is insincere for the Davos elite to lecture the world about human responsibilities without addressing the crimes in Communist China. The sad reality is greed is the root cause of corporate leaders selling their soul for an extra dollar in China. That must change."     

According to the Inside Trade report, the BIS amendment changes and adds language to an Export Administration Regulations (EAR) provision on crime control and detection items on the Commerce Control List. The regulations previously stated that applications for export licenses “will generally be considered favorably on a case-by-case basis unless there is civil disorder in the country or region or unless there is evidence that the government of the importing country may have violated internationally recognized human rights.”

The requirement for evidence that a foreign government “may have violated internationally recognized human rights” has been removed, with more general language in the amended version saying the applications will be generally considered favorable “unless there is a risk that the items will be used to violate or abuse human rights.”

The next line of the statute was also tweaked to say that “the judicious use of export controls is intended to deter human rights violations and abuses …” rather than “to deter the development of a consistent pattern of human rights abuses.”

“This revision is necessary to clarify to the exporting community that licensing decisions are based in part upon US government assessments about whether crime-controlled items may be used to engage in or enable violations or abuses of human rights including through violations and abuses involving censorship, surveillance, detention, or excessive use of force,” says a Federal Register notice, published Tuesday.

In the Federal Register notice, BIS says the the rules change will allow it to consider “violations or abuses of human rights by individuals or entities other than the government of the importing country and abuses of human rights by the government in addition to violations of internationally recognized human rights."

If used, this would also impact trade with a number of countries, including those who have trade preferences with the US. See the recent Department of Labor's 2020 List of Goods Produced by Child Labor and Forced Labor here

The change in wording “points to a broader consideration of human rights issues in the licensing process under the EAR,”  Steptoe & Johnson export control lawyers wrote in an Oct. 6 blog post.

The rule went into effect immediately. 

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