Supply Chains: SEC Reporting on China Forced Labor on the Horizon?
Companies with supply chains in China should be prepared to comply with enhanced due diligence and reporting requirements. That’s the conclusion of a Foley Hoag blog, which surveys recent legislative initiatives aimed at Chinese companies’ use of forced labor from Xinjiang and other regions of the country. One pending piece of legislation could even result in an SEC reporting requirement:
A measure with more serious potential repercussions for companies is H.R. 6210, the Uyghur Forced Labor Prevention Act. H.R. 6210 lists all companies found by the Congressional-Executive Commission on China to be suspected of using the forced labor of ethnic minorities in China. Most of the companies on the list are in the processed food and apparel industries. More importantly, the measure establishes a rebuttable presumption that all goods manufactured in Xinjiang are made with forced labor; accordingly, such goods are banned under the Tariff Act of 1930 unless the Customs Border and Protection Commissioner certifies otherwise.
The bill would also impose sanctions and visa restrictions on individuals and senior Chinese officials determined to be complicit in forced labor in Xinjiang. Additionally, H.R. 6210 requires companies to certify annually to the Securities and Exchange Commission that their products do not contain forced labor inputs from Xinjiang.
The prospects for the legislation’s passage are uncertain, but the Chinese government is taking it seriously enough to have imposed sanctions on one of the bill’s co-sponsors, Sen. Marco Rubio (R-Fla.) and on the Congressional-Executive Commission on China, for which he and another co-sponsor of the legislation, Rep. Jim McGovern (D-Mass.), serve as co-chairs.
-John Jenkins, TheCorporateCounsel.net August 18, 2020
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