Chinese E-Commerce Apps, Say Lawmakers, Might Assist Prevent the Implementation of Rules against Forced Labor

Chinese E-Commerce Apps, Say Lawmakers, Might Assist Prevent the Implementation of Rules against Forced Labor

A bipartisan group of lawmakers is warning that goods made with forced labor from Uyghurs and other persecuted minority groups in China could be slipping into the U.S. via Chinese e-commerce apps due to a “loophole” for imported shipments worth less than $800.

Leaders of the Congressional-Executive Commission on China, including Chair Rep. Chris Smith, R-N.J.; co-chair Sen. Jeff Merkley, D-Ore.; and ranking members Rep. Jim McGovern, D-Mass., and Sen. Marco Rubio, R-Fla., wrote to Customs and Border Protection seeking an explanation of how the so-called “de minimis” exemption for shipments under $800 applies under the Uyghur Forced Labor Prevention Act (UFLPA).

“News reports about Chinese companies such as SHEIN and TEMU raise concerns about direct-to-consumer purchases,” the group wrote while noting that “de minimis shipping allows vendors to send materials without having to report basic data, such as country-of-origin and manufacturer, if they claim that the value is under $800,” under trade law.

The lawmakers explained that they’re considering legislation to address the de minimis loophole and requested more information about how CBP is enforcing the UFLPA regarding “de minimis” shipments from the People’s Republic of China.

They asked the agency to “report back to us about how CBP intends to update the UFLPA implementation strategy to address the challenges posed by direct-to-consumer businesses such as TEMU, whose Superbowl ads signaled its efforts to expand its reach in the United States and whose app is now one of the most downloaded in the United States.

“The fact that the Google Play Store recently suspended the app of TEMU’s Chinese parent company Pinduoduo (PPD) – citing security concerns about malware – only makes a concerted response to TEMU based imports all the more urgent,” the group added.

TEMU is an online shopping service that operates in the U.S. and Canada but is a subsidiary of Pinduoduo Inc., a Chinese online retailer. SHEIN is a Chinese e-commerce company headquartered in Singapore that became the world’s largest fast fashion retailer late last year.

Application of the de minimis exception with respect to goods bought by consumers in the U.S. from SHEIN and TEMU could undercut enforcement of the UFLPA given that apparel and textile products are at high risk of being made in whole or in part with Uyghur forced labor in Xinjiang.

The U.S. and several other countries have accused China of committing genocide against the Uyghurs and other Muslim minority groups in Xinjiang. The Chinese Communist Party has engaged in the mass detention of Uyghurs in “reeducation camps” and forced them to work in factories. The CCP denies those allegations, claiming those camps are for “vocational training.”

The UFLPA took effect in June 2022 after it passed both chambers of Congress with bipartisan support and was signed into law by President Biden in December 2021. Under the UFLPA, there is a rebuttable presumption that any goods made in Xinjiang, including supply chain components sent elsewhere for further assembly, are the product of forced labor and subject to import restrictions.

The rebuttable presumption allows companies whose goods were held for inspection to provide clear and convincing evidence that the imports weren’t mined, produced or manufactured wholly or in part by forced labor. Importers can also request an applicability review and claim their supply chain doesn’t include components made with forced labor in Xinjiang so the UFLPA does not apply to their goods.

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