US Sanctions on Chinese Apparel Companies for Forced Labor Hit Retail Supply Chains
There is a risk that garments made from cotton produced by XPCC could be subject to a Customs and Border Protection withhold release orders.
Fashion and luxury goods companies need to be concerned about the recent sanctioning of Chinese companies in Xinjiang province by the US Departments of Treasury and Commerce and other Customs and Border Protection (CBP) developments related to importing products that contain fabric made with prison or forced labor.
There are three kinds of sanctions/import controls:
- OFAC, Department of Treasury, SDN Sanctions with Import Implications: The Department of Treasury has sanctioned by placing on the SDN list Xinjiang Production and Construction Corps (XPCC), which reportedly produces more than 7 percent of the world’s cotton.All transactions directly and indirectly between US persons and XPCC are prohibited and blocked, as well as all transactions with any entity that is 50% or more owned by XPCC (Treasury has, however, authorized certain wind-down transactions with such XPCC subsidiaries through September 29). In addition, due to the tie-in, the Administration has drawn between the entity and forced labor in the Xinjiang Province, there is a risk that garments made from cotton produced by XPCC could be subject to a Customs and Border Protection withhold release orders (WRO).
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