On June 21, 2022, the Uyghur Forced Labor Prevention Act (UFLPA) went into effect in the United States. It set the parameters for imports from the Xinjiang region of China, where millions of Uyghurs and members of other minorities persecuted by the Chinese Communist Party (CCP) are estimated to be victims of slave labor.

The cotton harvesting in Xinjiang, started a few weeks ago and is the first after the UFPLA. The effects are noticeable as the marked reduction in demand caused prices to fall by more than 20 percent. 

The cost per ton of raw cotton this year has fallen to around 15,500 yuan (about $2,100), down from more than 20,000 yuan per ton last year.

A year ago, before the UFPLA was a reality the scenario was completely different. Purchases were frantic and mills could not keep up with demand. 

High U.S. inflation rates and fears of a global recession, albeit to a lesser extent, could also be influencing the sharp drop in cotton, some analysts said.

According to the U.S. Department of Agriculture (USDA), its forecast for the next U.S. domestic cotton crop rose to 3.01 million tons in September, up from 2.7 million tons the previous month. This would be a direct consequence of cotton importers in the United States turning to the domestic market.

Cotton production in Xinjiang, however, has not declined. The Chinese communist regime will find itself overstocked at the end of the season. 

This is likely to cause the price of Chinese cotton to continue to fall, which could lead to a short-term disruption in the markets. 

What are the implications of the Uyghur Forced Labor Prevention Act?

Under the new rules of the UFLPA, U.S. companies cannot import products from Xinjiang unless they can reliably demonstrate that the products are not produced by forced or slave labor.

When the measures were implemented many U.S. officials urged allied countries and trading partners to join the boycott against the exploitation perpetrated by the Chinese Communist regime.

A month after the new regulations were announced in the United States, its major allies appear committed to following Washington’s lead in banning forced labor products from Xinjiang.

Thea Lee deputy assistant secretary for international affairs at the U.S. Department of Labor, mentioned during an interview with Reuters how she had worked with the European Union, Canada, and Mexico, on how to implement their own restrictions on products made with forced labor.

This means that not only has the U.S. market limited purchases in the region, but many other trading powers are beginning to follow suit. 

The European Parliament announced the adoption of two landmark human rights resolutions in mid-June that could directly affect the sectors of the textile industry that benefit from the labor exploitation of prisoners of conscience. 

The first resolution calls for a series of new trade instruments banning the importing goods produced with forced labor into the EU market.

The second resolution focuses on human rights in Xinjiang and research files warning of the persecution and exploitation of the Uyghurs. 

It calls again for a trade instrument banning the import of goods, mainly textiles, produced with forced labor in the region.

It should be noted that the European Union is the second largest market for Chinese exports after the United States, so it is expected that this type of restrictive measure, if actually implemented as announced, could have a real impact against labor exploitation.

The road is still long and exploitation continues

The Xinjiang region, where the persecution of the Uyghur minority is concentrated, is an important source of raw materials, such as cotton, but also of manufactured products, many of which reach markets in developed countries.

Certain key products produced in Xinjiang such as cotton, tomatoes and polysilicon (used for solar panels) are well known and easily detectable. This allows major powers such as the United States to limit their imports and affect their production. 

But Xinjiang has over the past few decades become an important link in the global supply chain of important industries such as automotive, batteries, and even pharmaceuticals. 

In fact, other products manufactured in the region are involved in hundreds of items scattered around the world. 

As a result, Xinjiang’s forced labor inputs are found in the clothes we wear, the food we eat, the medicines we ingest, and even the diapers we put on our babies.

The impact of Uyghur forced labor is global, the drop in cotton prices due to reduced demand is certainly good news, but do not think that this solves the problem.

Allegations of persecution and exploitation by the communist regime, both of Uyghurs and other minorities, continue to emerge. 

Reversing this requires a real commitment from more countries and especially from those trading and consuming powers that still benefit, directly or indirectly, from the labor exploitation of certain sectors.

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