The United States is increasing economic pressure on China's Xinjiang region by banning cotton imports on U.S. soil by China's powerful quasi-military organization, Xinjiang Production and Construction Corps (XPCC), due to serious human rights violations against ethnic minorities, especially the Uyghurs of Xinjiang. A further step has therefore been taken after the Commerce Department's ban last July on all dollar transactions with XPCC.

"Human rights violations perpetrated by the Chinese Communist government will not be tolerated by President Trump and the American people," said Acting Assistant Secretary of the Department of Homeland Security  (DHS) , Ken Cuccinelli. "DHS is taking the lead in enforcing our laws to ensure that perpetrators of human rights violations, including U.S. corporations, are not allowed to manipulate our system in order to profit from slave labor. "Made in China" is not only not just a country of origin, it is a warning label. " said the DHS statement.

Founded in 1954 and administered by both the Chinese government and the Xinjiang Chinese Communist Party, XPCC controls at least 20 percent of Xinjiang's GDP, control over agriculture and controls much of the land, Deloitte says. In addition, XPCC is involved in at least a third of China's total cotton production. Thus, as the main economic player in the region, it is difficult for American textile companies and retailers to get rid of XPCC by working with Xinjiang.

Can XPCC be bypassed?

While Treasury sanctions target the XPCC's financial structure, the ban issued yesterday will require garment companies and other companies shipping cotton products to the United States to eliminate XPCC-produced cotton fiber from their supply chains, said Brenda Smith, Assistant Commissioner of Commerce for U.S. Customs and Border Protection (CBP). There is the question of cotton traceability and the complexity of the supply chain (Read: Will the  US cotton ban from Xinjiang in China change the cotton market?). A China-based trader interviewed by Reuters points out that the ban blocks virtually all Chinese imports of cotton textiles . Adding that identifying cotton from a specific supplier will significantly increase manufacturing costs, and only the few large companies with fully integrated operations in the textile supply chain could guarantee that no XPCC products have been used.

While U.S. apparel manufacturers had sharply criticized the possible ban on cotton imports from Xinjiang, they yesterday welcomed the specific ban for XPCC. In a statement, the American Apparel and Footwear Association, National Retail Federation, Retail Industry Leaders Association, and The United States Fashion Industry Association condemned forced labor and said, "We applaud the increased efforts of the U.S. government and other entities. s to combat human rights violations, including forced labour and the persecution and detention of Uighurs and other ethnic minorities in China. We note that today's action focuses specifically on the XPCC, which is already subject to sanctions that the industry is helping to enforce."

Major apparel brands, such as Gap Inc, Patagonia Inc and Zara's owner, Inditex, told the Thomson Reuters Foundation that they did not source from factories in Xinjiang - but could not confirm that their supply chains were free of cotton harvested from the region.