On December 23, the South China Morning Post noted that pop star Karry Wang would no longer serve as Intel’s brand ambassador. The singer decried that “national interests exceed everything” via Weibo, China’s version of Twitter. Why the sudden hate for a semiconductor company from one of China’s most popular young stars? The Uyghur Forced Labor Prevention Act that President Joe Biden signed into law the day before.
The far-reaching bill, which also passed the House and the Senate unanimously, bans imported goods from China’s Xinjiang region and imposes sanctions on individuals responsible for forced labor in the region. While the far west Chinese state might not be well known in the U.S., factories in Xinjiang produce electronics and apparel shipped across the globe. According to The New York Times, an estimated 20% of the world’s cotton and nearly half of the world’s polysilicon — the natural resource used in producing solar panels — come from Xinjiang. It is now illegal to import goods from the region into the U.S. unless companies can prove they weren’t made by workers compelled to toil at manual jobs.
The law is the U.S. government’s biggest move yet to punish China for reported human rights abuses and genocide against the predominantly Muslim Uyghur minorities who populate the region. Accusations of widespread human rights abuses in Xinjiang include mass detentions, torture, forced sterilizations, and cultural persecution. The law shifts the burden of proof from customs officials to large corporations. In other words, firms will have to prove that factories and suppliers do not use slavery or coercion. Hence the reason for Intel’s statement and the subsequent backlash from China, which continues to deny claims of any abuse.
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In December, Intel’s annual letter to suppliers (available on its website) stated the company was “required to ensure that its supply chain does not use any labor or source goods or services from the Xinjiang region” following imposed restrictions. The letter sparked criticism in local and state Chinese media. In a Chinese-language statement on Thursday on its official WeChat and Weibo accounts, Intel tried to explain its way out of the situation, according to Reuters.
“We apologize for the trouble caused to our respected Chinese customers, partners, and the public. Intel is committed to becoming a trusted technology partner and accelerating joint development with China,” Intel said.
The apology, which drew criticism from competitors and from the U.S. government, illustrates the law’s massive impact. The bill’s reach ranges far beyond raw materials for the semiconductor company. Sugar, petroleum, and an array of minerals are just a few of the capital supplies that flow into Chinese factories from Xinjiang that, in turn, manufacture products for U.S. multinational firms. The new law’s consequence was evident before it even passed the legislature as negotiations involved some of this country’s biggest corporations — Nike and Coca-Cola, for two — who worked to limit the bill’s scope.
If the Uyghur Forced Labor Prevention Act is enforced as written today, it would likely compel many of this country’s biggest companies to rework how they do business, or risk blocked products at customs. Consequently, the law is expected to spark a massive lobbying push by firms looking to ease restrictive guidelines as the government shapes the rules that importers must follow in sourcing Chinese products.
The Biden administration will convene hearings over the next four months to investigate how pervasive forced labor is, which will be pivotal in defining the legislation’s reach.
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