Forced labor as a global trade issue

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Forced labor as a global trade issue

Bark Tae-ho
The author is the president of Lee & Ko Global Commerce Institute and former minister of trade.
 On Dec. 23, U.S. President Joe Biden signed the Uyghur Forced Labor Prevention Act (Uflpa) aimed at banning the importation of goods made with forced labor in the Xinjiang Uyghur Autonomous Region in China.

After nearly two years of debate, the act passed through both chambers of Congress with strong bipartisan support. The legislation confirms America’s suspicion that forced labor is being used in the Uyghur region and also reflects its determination to mobilize powerful trade measures to prevent it. Following the solicitation of public comments and a public hearing, the act is expected to go into effect on June 22.

Section 307 of the Tariff Act of 1930 prohibits importing any product that were mined, produced or manufactured wholly or in part by forced labor in any foreign country. The act, which did not target any specific region, quickly faded into obscurity. But after the U.S. Customs and Border Protection (CBP) increasingly imposed restrictions on importing Chinese products due to alleged force labor in Xinjiang, the U.S. government took steps to put additional pressure on China through legislation to help curb China’s rise.

Compared to the existing tariff act, the Uflpa has been reinforced in two respects. First, while the existing act only banned importing goods suspected of using forced labor, the new act basically prohibits importation of all goods produced in the Uyghur autonomous region. That reflects Washington’s assumption that the element of forced labor is involved in the process of manufacturing goods in the region. Second, while the U.S government — specifically, the CBP — primarily judged whether forced labor was used to produce specific goods in the past, the responsibility for proving the innocence of local producers, including in securing raw materials and parts, to the U.S. government should be borne by importers under the new act. In other words, importers must take more responsibility to prove the legitimate production of goods. 
U.S. President Joe Biden signs the Uyghur Forced Labor Prevention Act at the White House, Dec. 23, 2021. [AFP/YONHAP]
Concerns about forced labor in the Uyghur region have spread to most advanced economies, including the European Union (EU), Britain, Canada, Australia and New Zealand. The EU Commission basically opposes the importation of products made with forced labor. But no consensus has been reached among member nations on the issue and some members point out that imposing restrictions only on the Uyghur region can violate the non-discrimination principle. In the meantime, Canada and Australia are pushing for legislation akin to Uflpa. Despite such differences in positions of developed countries over forced labor in the Uyghur region, the move to put restrictions on such products will gain further momentum in the future.

Washington is drawing up a list of goods likely to be made with forced labor before putting the Uflpa into action. The list is known to include polysilicon — a key raw material in the solar photovoltaic (PV) supply chain — as well as cotton and tomatoes. As 50 percent of the world’s polysilicon production is concentrated in the Uyghur region, it could deal a critical blow to solar panel companies in the United States if importation of the material from the region gets difficult. Regardless of apparent damages on domestic solar energy industry, the United States is poised to implement the forced labor prevention act.

The United States’ legislation and advanced countries’ moves to regulate forced labor carry great significance in two respects. First, the act prohibits Uyghur goods imported, processed and assembled by third countries like Korea from entering the U.S. market. In that case, Korean companies importing raw materials or parts from the region can face a stumbling block if they want to export to the United States. Second, the United States and other developed nations can pressure Korea to join the move to end forced labor in the Uyghur region.

Korean enterprises must thoroughly prepare for such situations. Given the risks from the region, our chip and solar energy companies, in particular, must review their supply chains. They must devise a strategy to acquire raw materials, intermediate materials and components in a more stable way if necessary. At the same time, if companies import core mineral materials from the region, they must check if they were mined with forced labor.

The government also must establish its position on putting restrictions on goods made with forced labor.
Translation by the Korea JoongAng Daily staff.
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