Cotton yarn and forced labor: A warning for Vietnamese textiles

Last week, the Japanese press simultaneously reported on the textile giant, Fast Retailing UNIQLO, having trouble in the US market. In January 2021, a shipment of men's shirts (made of cotton) was intercepted at the Port of Los Angeles/Long Beach with an order known in US law as a "Withhold Release Order (WRO)".

It is a commercial tool to refuse imports when it is suspected that the goods are produced by or in connection with forced labor, a practice condemned and excluded under the International Labor Organization. economy (ILO).

What does UNIQLO have to do with?

As we all know, China and Vietnam are the two "headquarters" of production and processing for this giant textile corporation. UNIQLO, like textile manufacturers in general, finds it difficult to "redirect" production from China every day, especially with cotton yarn.

According to recent statistics, China provides more than 22% of cotton yarn material for the world, however, about 87% of this cotton is harvested and produced from the Xinjiang Uyghur Autonomous Region (China). Country).

Recently, the human rights issue in Xinjiang has been a "sensitive" story in US-China relations. But not only this bilateral relationship, the European Union has also suspended the ratification of the Comprehensive Investment Agreement with China due to this issue.

By suspecting the use of forced labor in the cotton industry, the United States has immediately applied the tools of import prevention available in its complex commercial legal system. It is worth mentioning that this measure not only refuses to import cotton yarn materials suspected of using forced labor into the US market, but it also "bans" products made from these materials. this – textiles. To date, the US has three times issued orders to stop WRO related to suspected forced labor in Xinjiang (September 2020, November 2020, and January 2021).

WRO restraining order on forced labor

Originating in the 1890s, the prohibition on imports of products suspected of using forced labor was officially codified in the United States in 1930. Until 2015, this prohibition was incomplete because US law still allows the import of a part of the suspected products to meet the domestic demand clause (consumptive demand clause). However, this provision has been repealed. This means that the United States is now in principle "saying no to products that use forced labor".

Accordingly, anyone who has a belief or argument that goods imported into the United States use or are involved in forced labor, shall report directly to US Customs and Border Protection, or to director of the port where the goods are imported, even simply by sending information to an email address.

US Customs and Border Protection will consider, when there are reasonable grounds that the goods may be made from forced labor, it will issue an order to stop WRO. This restraining order applies to each manufacturer's specific imported goods.

However, due to the "hotness" of human rights concerns in Xinjiang from the US Government as well as the "unanimity" of the US textile industry, the order to block January 2021 is on all cotton. and downstream products from Xinjiang. Political factors have supported this order when the Uyghur Forced Labor Prevention Act is being discussed in the US Congress.

As a rule, businesses affected by the WRO restraining order have three months to “clarify” that their products are not “involved” in forced labor. In fact, UNIQLO was not convincing enough to "vindicate" itself before US law enforcement. And as a result, either the suspected shipment will have to be shipped to another country or will be destroyed in the US.

What should Vietnam textile and garment pay attention to?

The problem here is whether the control of the supply of raw materials has anything to do with forced labor. Abolition of forced labor is a provision "accompanied" with trade activities included in Vietnam's two "new generation" free trade agreements, the CPTPP and the EVFTA.

But here is the obligation to eliminate forced labor in our country (as well as in other contracting parties), but we can't do anything about the problem of forced labor (if any) in a third country – where we import raw materials. The difficulty of the problem is to monitor the whole process from planting - harvesting cotton, to preliminary processing - spinning, and weaving yarn into fabric so as not to "get involved" in forced labor.

According to cotton material trading experts, this "total" control problem is very difficult to implement in the short term if businesses do not have foresight, it is costly and can only be done by large corporations. Large-scale textiles have the ability to negotiate and rotate supply.

According to information from the General Department of Customs, currently Vietnam is still heavily dependent on the supply of raw materials for the textile and garment industry, leather shoes from China (47% of the total value of imported materials - in 2019). With the "dominant" proportion from the supply of Xinjiang cotton and yarn in this country, imported materials for the textile industry in our country are likely to be suspected of being "involved" in the issue of forced labor.

This means that some textile products exported from Vietnam are at risk of facing an order to prevent WRO from entering the US market. If it is really applied, then the problem of proof can be a big problem. With a short period of time (three months), the gathering of information, consolidation of records, required field trips, audits, presentations, etc. can be overwhelming. So, what can we do to anticipate a risk called WRO?

The first thing is to understand and be able to verify the source of imported cotton yarn related to the issue of forced labor. The US-China trade-political conflict is, after all, an ideological conflict over the role of the state in the economy and society. There is hardly a possible solution, at least for the foreseeable future.

Regarding the issue of forced labor in Xinjiang, the US always accused; China has always denied it. We may care less about the yes or no story, but what we need is the stability and confidence of the US consumer market. We can't do anything with the sovereignty of the country where the material is sourced, but we can choose the source.

And it is also necessary to pay attention to the issue of forced labor in the country or enterprise selected as "alternative" so as not to fall into the situation of "avoiding the melon shell meeting the coconut shell". In addition, our country's textile and garment enterprises need to integrate provisions related to forced labor in contracts to supply raw materials from foreign partners. So that if there is a "problem" in the US market, we also have the least legal basis for a breach of contract.

https://vinatex.com.vn/bong-soi-va-lao-dong-cuong-buc-canh-bao-cho-hang-det-may-viet-nam/

Source: vinatex.com.vn