New US customs measures expanding the fight against forced labour in China, have laid bare the need for greater transparency within the fashion industry’s supply chain.

US Customs and Border Protection announced on Monday five withhold release orders targeting apparel, cotton and other goods produced in Xinjiang following allegations of widespread human rights abuses and forced labour in the Chinese region.

The withhold release orders are based on Section 307 of the Tariff Act of 1930, which prohibits the importation of goods when information reasonably but not conclusively indicates that they were made under prison and forced labour conditions.

“Today’s withhold release orders send a clear message to the international community that we will not tolerate the illicit, inhumane and exploitative practices of forced labour in US supply chains,” said acting CBP commissioner Mark A. Morgan in a statement.

At a press conference on Monday, China’s Foreign Ministry spokesperson Wang Wenbin reiterated the country’s stance that the “true agenda of the US is not caring for the human rights situation in Xinjiang, but undermining the region’s prosperity and stability and containing China’s development under the pretext of human rights”.

The global fashion industry relies heavily on Chinese cotton, 85 per cent of which is produced in Xinjiang, and turned into clothes in Chinese factories or sent to other garment manufacturing countries in Asia.

But a lack of transparency makes it difficult to track: for example, products labelled as made in countries like Bangladesh, Vietnam, the Philippines and Cambodia could still include cotton produced in Xinjiang, a major fabric and yarn source, according to Sheng Lu, associate professor in the department of fashion and apparel studies at the University of Delaware.

In the US, 24 per cent of all imports of cotton textile and apparel, a category worth $11.1 billion, come from China, while in Europe China accounts for 29 per cent of all clothes imported from extra-EU countries, or €23 billion.

The US banning of a cotton producer, two apparel factories and one vocational skills education and training centre that provides labour, falls short of previously announced plans of banning all Xinjiang cotton and yarn, textiles and apparel made with Xinjiang cotton, which would have had larger consequences on the US fashion supply chain. Still, the US ban shows that cotton is becoming politicised and fashion needs to better assess, understand and engage with their suppliers if the situation worsens or is extended, experts say.

“[Companies] can cut off direct relations with Xinjiang suppliers, but it's very difficult to make sure that their [other] suppliers are not using Xinjiang cotton,” Di Fan, assistant professor of fashion retail and marketing at the Hong Kong Polytechnic University, says. A broader ban covering all Xinjiang cotton and yarn, textiles and apparel made with Xinjiang cotton would have required US companies to investigate suppliers across the value chain to ensure products had no connection with Xinjiang cotton. The ban would have been an incentive for companies to change their modus operandi, but it would also have been difficult to execute, says Fan.

Very few fashion companies have a clear view of what is going on in their supply chains beyond their first or second-tier suppliers because fashion supply chains are likely to develop across different countries and involve a large number of smaller subcontractors and suppliers. According to the 2020 Fashion Industry Benchmarking Study, 85 per cent of US companies track first and second-tier suppliers, but only 25 and five per cent do the same for third and fourth-tier suppliers, respectively. Companies blame suppliers not being fully cooperative, dealing with too many countries and vendors and the absence of clear regulations.

The issue isn’t limited to the US and China alone

A joint petition from Global Legal Action Network and the World Uyghur Congress at the end of August requested a halt to the importation of cotton and cotton-made goods produced with forced and prison labour in Xinjiang. GLAN and the World Uyghur Congress also petitioned the UK’s revenue and customs authority, HMRC, in April and plan to target other jurisdictions going forward. (HMRC confirmed to Vogue Business it has received the petition and is “considering its content”.)

The European Union is already working on mandatory due diligence legislation on environmental and human rights, which will make European companies legally liable for the failure of due diligence across the supply chain.

The bans requested by GLAN and the World Uyghur Congress and the proposed EU legislation imply different obligations and have different weights, says GLAN’s director Gearóid Ó Cuinn.

“The mandatory due diligence legislation places an obligation on the company to act; we are asking the state to intervene where companies have failed, and that is what the US is doing,” he says, adding that a ban would be “possibly stronger” as it would actually regulate access to the market.

According to Fan, this ban would work as a non-tariff trade barrier, leading to significant supply glitches as non-complying products would be detained by customs. Companies relying on global supply chains would consequently act to mitigate these risks, firstly by diversifying the supply chain to countries like Vietnam, Pakistan or India and possibly repatriating raw cotton supply to the US. But because even products made outside of Xinjiang and outside of China could be made using cotton produced in Xinjiang, and the fashion supply chain remains extremely opaque, a blanket ban could ultimately bring companies to disengage with all suppliers possibly related to the use of Xinjiang cotton.

Mandatory due diligence is better suited to affect long-term systemic changes as it requires companies to engage on a routine basis with suppliers to assess their operations and invest in training, auditing and reform, says Tara Van Ho, co-director of the Essex Business and Human Rights Project at the University of Essex.

“With these kinds of [human rights] issues, the instinct is immediately to disengage, but actually what we should be looking for is deeper engagement,” says Van Ho. She also admits that “there will come a point where businesses might have to leave a situation because they are not able to affect the change needed to stop the violation of human rights”.

For GLAN's Ó Cuinn, Xinjiang represents one such situation. “Ultimately, the onus of reform is on the Chinese state,” he says. "[But] there is a question of urgency here and this is one way to make both companies and China pay attention.”

(The five US withhold release orders apply to goods produced by Lop County No. 4 Vocational Skills Education and Training Center, Lop County Hair Product Industrial Park, Yili Zhuowan Garment Manufacturing Co., Ltd., Baoding LYSZD Trade and Business Co., Ltd., Xinjiang Junggar Cotton and Linen Co., Ltd. and Hefei Bitland Information Technology Co., Ltd.