US Imports of Auto Makers Face Increased Scrutiny Over Potential Links to Chinese Forced Labor

In a new development aimed at eradicating U.S. connections to forced labor within Chinese supply chains, electric-vehicle batteries and other automotive components have become the latest targets for scrutiny by U.S. authorities. According to a document seen by Reuters, as well as agency statistics and sources, the enforcement of a year-old U.S. law barring the import of goods produced in Xinjiang, China, has expanded its focus beyond its initial areas of concern, which included solar panels, tomatoes, and cotton apparel.

This shift in focus comes as U.S. Customs and Border Protection (CBP) intensifies inspections of products destined for auto assembly plants, potentially leading to challenging times for automakers. These companies will be required to furnish robust evidence that their supply chains remain untainted by associations with a region where U.S. officials believe Chinese authorities have established labor camps, notably affecting Uyghurs and other Muslim minority groups.

Despite allegations of abuses, Beijing has consistently denied any wrongdoing.

This heightened scrutiny follows the enforcement of the Uyghur Forced Labor Prevention Act (UFLPA), which has already impacted solar energy projects. Detained shipments of solar panels have disrupted developments, with installations of large solar energy facilities for utilities experiencing a 31% decrease last year due to constrained panel supplies.

Both solar energy and battery-powered electric vehicles stand as critical industries in the Biden administration's broader efforts to steer the U.S. away from fossil fuels and tackle climate change.

When shipments are detained, CBP provides importers with a list of examples from previous reviews and the necessary documentation to prove that products are not manufactured using forced labor.

A recent version of the CBP document, obtained by Reuters through a public records request, shows updates between April and June this year that now include batteries, tires, aluminum, and steel. Although the focus initially concentrated on cotton, tomatoes, and polysilicon, used in solar panels, CBP has not specifically responded to questions regarding the increased scrutiny of automotive imports.

The expansion of focus is reflected in CBP data, which indicates that detentions of automotive and aerospace shipments under the UFLPA have risen since February. Detentions of base metal shipments, including aluminum and steel, have also surged from around $1 million per month in late 2022 to over $15 million per month.

While automotive detentions remain smaller in scale compared to solar panel imports, valued at over $1 billion, they have raised concerns within the industry. Experts suggest that disruptions caused by such detentions could be highly detrimental to automakers, given the complexity of their supply chains.

A study by Britain's Sheffield Hallam University, published in December, underscored the exposure of major automakers to products manufactured with forced labor in Xinjiang, prompting further investigation. The U.S. Senate Finance Committee Chair Ron Wyden has expressed support for CBP's scrutiny of imports in this regard.

With the increased attention on auto components and a growing emphasis on transparency in supply chains, industry stakeholders are urged to enhance their due diligence efforts and ensure that their products are untainted by forced labor links.

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This shift in focus comes as U.S. Customs and Border Protection (CBP) intensifies inspections of products destined for auto assembly plants, potentially leading to challenging times for automakers. These companies will be required to furnish robust evidence that their supply chains remain untainted by associations with a region where U.S. officials believe Chinese authorities have established labor camps, notably affecting Uyghurs and other Muslim minority groups.

Despite allegations of abuses, Beijing has consistently denied any wrongdoing.

This heightened scrutiny follows the enforcement of the Uyghur Forced Labor Prevention Act (UFLPA), which has already impacted solar energy projects. Detained shipments of solar panels have disrupted developments, with installations of large solar energy facilities for utilities experiencing a 31% decrease last year due to constrained panel supplies.

Both solar energy and battery-powered electric vehicles stand as critical industries in the Biden administration's broader efforts to steer the U.S. away from fossil fuels and tackle climate change.

When shipments are detained, CBP provides importers with a list of examples from previous reviews and the necessary documentation to prove that products are not manufactured using forced labor.

A recent version of the CBP document, obtained by Reuters through a public records request, shows updates between April and June this year that now include batteries, tires, aluminum, and steel. Although the focus initially concentrated on cotton, tomatoes, and polysilicon, used in solar panels, CBP has not specifically responded to questions regarding the increased scrutiny of automotive imports.

The expansion of focus is reflected in CBP data, which indicates that detentions of automotive and aerospace shipments under the UFLPA have risen since February. Detentions of base metal shipments, including aluminum and steel, have also surged from around $1 million per month in late 2022 to over $15 million per month.

While automotive detentions remain smaller in scale compared to solar panel imports, valued at over $1 billion, they have raised concerns within the industry. Experts suggest that disruptions caused by such detentions could be highly detrimental to automakers, given the complexity of their supply chains.

A study by Britain's Sheffield Hallam University, published in December, underscored the exposure of major automakers to products manufactured with forced labor in Xinjiang, prompting further investigation. The U.S. Senate Finance Committee Chair Ron Wyden has expressed support for CBP's scrutiny of imports in this regard.

With the increased attention on auto components and a growing emphasis on transparency in supply chains, industry stakeholders are urged to enhance their due diligence efforts and ensure that their products are untainted by forced labor links.