If the bill becomes law, it could affect supply chains, drive up cotton prices and influence apparel trends. Those developments would impact the promotional products industry, experts say.
Concerned over reports of forced labor, the U.S. House of Representatives has passed a bill that would ban the import of all cotton from the northwestern China province of Xinjiang – a move that could have a dramatic effect on apparel supply chains, potentially including those in the promotional products industry.
The House, which approved the bill in a 406 to 3 vote on Tuesday, Sept. 22, is now sending the legislation to the Senate for consideration. The Senate would have to approve before it could become law.
Xinjiang makes about 85% of China’s cotton. China produces about 20% of the entire world’s cotton supply. “About one in five garments flowing into the U.S. contains Xinjiang cotton. It would be a challenge to identify any major apparel brand or retailer whose supply chain doesn’t run through Xinjiang,” Scott Nova of the Worker Rights Consortium, a nonprofit labor rights organization that monitors global supply chains for abuse, told NBC News.
Rep. Jim McGovern, a Democrat from Massachusetts, introduced the Xinjiang cotton ban bill. He was motivated by various investigations that indicate more than 1 million ethnic Uighur people from Xinjiang are being held in internment camps where they’re forced to work in factories and on cotton farms against their will. At the camps, authorities make the primarily Muslim Uighurs study Marxism and renounce their religion, NBC reported.
Governmental authorities in China call the alleged internment centers “re-education camps” and assert that they provide vocational training, lead to employment and help fight extremism. There is no forced labor, Beijing officials say. McGovern – and others in the House that voted for his bill – don’t buy that line. “It is time for Congress to act,” McGovern said during a debate on the bill. “We found that the evidence of systematic and widespread forced labor in Xinjiang is astounding and irrefutable — and includes evidence from camp detainees, satellite imagery of factories being built at internment camps, and public and leaked Chinese government documents.”
Stephen Lamar, president of the American Apparel and Footwear Association, last week told U.S. lawmakers that a blanket ban on cotton or other products from Xinjiang would “wreak havoc” on supply chains. He said an all-out ban on Xinjiang cotton and/or other products from the province would be impossible to enforce.
Lamar’s comments to the House’s Ways and Means trade subcommittee came on Sept. 17, a few days after the U.S. Department of Homeland Security’s (DHS) Customs and Border Protection (CBP) issued Withhold Release Orders (WRO) on apparel, cotton, hair products, computer parts and other items produced by particular companies in Xinjiang.
“Such a WRO or legislation would no doubt make headlines, but they would wreak havoc on human rights, economic development and legitimate supply chains, themselves already battered by COVID-19 all over the world,” Lamar said. “As a country, we simply do not have the capability or capacity to implement or comply with or enforce a blanket WRO or the proposed legislation right now.”
Eric Simsolo, director of business development at Gardena, CA-based Top 40 supplier Next Level Apparel, said that if the Xinjiang cotton ban becomes law it could trigger cotton price increases and propel a shift toward more synthetic fibers in apparel. Both of those developments would impact the promo products industry. “Between India and China, you have 47% of the world’s cotton supply,” Simsolo told Counselor. “If one were to be limited, or turned off, you would have a large supply issue for the world’s cotton commodity exchange. Long story short, prices will go up. The vendors that are smart about how they source and have the least impact on their COGS will be able to survive the price wars. This increase in cotton will directly affect cotton and cotton-blends. If prices go high enough, we could see the demand for and usage of synthetic fibers like polyester, nylon and modal go up.”
Simsolo also thinks a cotton ban – or even just the discussion around it – could compel more promo industry apparel companies to intensify their corporate social responsibility efforts (CSR). He noted that Next Level has a robust CSR program and that its supply chain is not exposed to human rights issues. “The Fair Labor Association has had their eye on the Xinjiang region for some time now,” Simsolo told Counselor. “In some ways, this proposed ban is catching up to the rhetoric that companies with serious CSR’s have been watching.”
Avenel, NJ-based Vantage Apparel s one of those companies with a serious CSR focus. The Top 40 supplier already maintains a strict corporate code of conduct that includes annual factory audits. As news about forced labor in Xinjiang has spread, Vantage “immediately reviewed our supply chain mapping chart to reconfirm that no raw material supplies were coming in from that region,” Gina Barreca, Vantage’s director of marketing, told Counselor. “We also reached out to our manufacturing partners and all of our factories have submitted an undertaking confirming there is no forced labor of any kind, especially from the Xinjiang region.”
Top 40 supplier alphabroder has been diligent about avoiding Xinjiang. The Trevose, PA-based supplier conducts traceability and transparency assessments of its manufacturers’ supply chains to evaluate fabric and component origin in its private brands — North End, Devon & Jones, Ultra Club, Harriton, CORE365 and TEAM 365.
“Based on the assessment, we determined that no items used in the manufacturing of alphabroder private brand apparel styles is from the Xinjiang region,” Andrea Lara Routzahn, alphabroder’s senior vice president of portfolio and supplier management, told Counselor. “We will remain vigilant to ensure that we do not knowingly purchase any components for our goods that originate from the Xinjiang region of China.”
Chinese authorities have said that U.S. legislative action aimed at Xinjiang has nothing to do with human rights. “Lately, China has shown with facts and numbers that issues relating to Xinjiang are by no means about human rights, ethnicity or religion, but about counterterrorism and anti-separatism,” said Zhao Lijian, a foreign ministry spokesperson. “What the U.S. truly cares about is never human rights. It is just using human rights as a cover to suppress Chinese companies, undermine stability in Xinjiang and vilify China’s Xinjiang policy.”