A path for business out of the China forced labor dilemma

A path for business out of the China forced labor dilemma
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China’s persecution of its Muslim Uyghur minority in Xinjiang Province has confronted foreign companies with a dilemma: disapprove and face Chinese wrath (e.g., H&M, Adidas and IKEA), or remain silent and incur reproach from activists in democratic countries. Understandably not wanting to be drawn into larger political tensions, companies might best address the issue most directly affecting them — forced labor in their global supply chains.

The stakes could not be higher for firms doing business in China or relying on Chinese exports.  In January, the U.S. banned Xinjiang-grown cotton (20 percent of the global supply) and tomatoes. Beyond garment manufacturers, Kraft Heinz was impacted and Coca-Cola is worried that it might be next (Xinjiang sugar). Climate-change campaigners should be concerned that half the world’s supply of polysilicon (essential to solar panels) comes from Xinjiang.

Unfortunately, firms have few ways of responding to charges of complicity in human rights abuses. Because of restricted access to Xinjiang, they cannot ensure that their global supply chains are free from forced labor. Nor can they look to labor auditing firms; five of the world’s largest such firms told The Wall Street Journal in September that restrictions on access rendered it impossible to accredit Xinjiang sourcing. 

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Fortunately, business can find an unlikely ally in the International Labor Organization (ILO), the United Nations specialized agency for the world of work, and thus help generate a near-term alternative to the U.S. Senate’s bipartisan Uyghur Forced Labor Prevention Act. The ILO, in 1930, was the first international organization to condemn forced labor. Today hundreds of corporate codes-of-conduct track the ILO’s fundamental principles that include prohibition of forced labor. 

China retorts that what is occurring in Xinjiang is not forced labor but, rather, vocational training. What’s needed is to have this claim examined on site by a neutral fact-finding team.  The ILO is expertly positioned to do so. The benchmark would be the 1957 ILO convention, inspired by Soviet-era gulags, that forbids “any form of forced or compulsory labor — as a means of political coercion or education, or as a punishment for holding or expressing political views or views ideologically opposed to the established political, social or economic system” or “as a means of racial, social, national or religious discrimination.”

Any firm taking this position alone risks severe pushback. But, from a business perspective, the ILO is a uniquely attractive forum because it is the only U.N. agency in which employers (and workers) are represented alongside governments. The International Organization of Employers (IOE) coordinates the voice of employers at the ILO. Shielded by the IOE umbrella there, individual firms would have cover from China’s ire when the forced labor issue is raised. 

Sometimes criticized for its slow and measured process, the ILO nonetheless can produce lasting results — most recently in abolishing forced labor in Uzbekistan’s cotton fields. Rather than censure offending countries, the ILO seeks to work with them to improve their compliance with labor rights. The ILO’s pragmatic, low-visibility approach may well receive a better reception in Beijing than strident condemnation in other U.N. forums.

An opportunity for business will occur in June when the ILO’s Committee of Experts’ General Survey is reviewed. This year’s subject is “Employment and Decent Work.” China has ratified the relevant convention that commits member states to pursuing a policy of “full, productive and freely chosen employment.” After pointing this out, the employers’ spokesperson could then simply ask which member states may have failed to meet their commitments. 

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This would flag the need for a broader discussion, which invariably would segue into a review of the ILO’s forced labor conventions, neither of which China has ratified. But, at the moment, China itself is not in a position to ignore recent commitments it has made. The EU-China Comprehensive Agreement on Investment (CAI), agreed in principle at the end of last year, specifically commits China to ratification of the ILO’s forced labor conventions. There are strongly held views within the European Parliament, which must afford its “consent” to the CAI, that the European Union should demand a strict Chinese ratification schedule of these conventions before the CAI’s own year-long ratification period concludes.  

Meanwhile, this issue is heating up. During the ILO’s March 2021 Governing Body meeting, the United States, Canada, New Zealand and United Kingdom jointly faulted the ILO’s 2020 Annual Report on fundamental rights for having failed to “reflect information on persistent or systemic labor rights deficits globally” — notably, “state-sponsored forced labor of vulnerable groups and minorities, including the agricultural and garment sectors, as well as mass transfers of forced laborers.” Although China was not named, there was no doubt as to the primary target of this statement.

At this critical juncture, it is in the interest of all global companies to call on the ILO to offer “technical assistance” to China, since Beijing may well view accepting such assistance as in its own interest. As the ILO’s recent success regarding Uzbekistan’s use of forced labor demonstrates, this could open up a realistic path to resolving the PRC’s forced labor question.  And the Senate’s Uyghur Forced Labor Prevention Act would remain waiting in the wings should an ILO remediation effort fail to realize its desired results.

Janice Bellace, professor of legal studies and business ethics at The Wharton School, was chairperson of the International Labor Organization’s (ILO) Committee of Experts from 2008-2010.

George Dragnich, a retired senior Foreign Service Officer, was an assistant director-general of the ILO from 2009-2011.

Editor's note: This article was edited after publication to remove a reference to Campbell Soup, which does not source any ingredients from the Xinjiang region.