The U.S. Senate Finance Committee* in a report published today about its investigation into links between US automakers and forced labor within the People’s Republic of China** found exposure to forced labor [1] in the supply chains of major automakers, including BMW Group (“BMW”), Jaguar Land Rover and its wholly-owned sales subsidiary Jaguar Land Rover North America (“Jaguar Land Rover”), and Volkswagen.
“The Committee’s investigation has determined that BMW manufactured and imported vehicles containing parts presumptively made with forced labor; Jaguar Land Rover imported parts presumptively made with forced labor; and VW manufactured vehicles for the US market with parts presumptively made with forced labor and has ongoing business ties to manufacturing in the Xinjiang Uyghur Autonomous Region (“Xinjiang”).”
Importing goods made with forced labor to the United States has been illegal since the 1930s. Recognizing the systematic, government-sanctioned use of forced labor in the Xinjiang region of China, the Uyghur Forced Labor Prevention Act (UFLPA) in 2021 strengthened enforcement of the law with respect to facilities in Xinjiang and other entities identified as having been complicit in China’s forced labor scheme.
The Finance Committee also found
- Questionnaires, self-reporting and audits of direct suppliers are insufficient to proactively identify
- Forced labor exposure in supply chains, particularly in China.
- Reliance on only the Uyghur Forced Labor Prevention Act (“UFLPA”) Entity List and tools that scan for publicly available information related to critical media of Chinese government-owned or supported companies is not a sufficient means to identify forced labor within supply chains.
- Credible human rights audits cannot be conducted in Xinjiang.
*Investigation Background
- In 2022, Chairman Senator Ron Wyden began an investigation of US automakers’ supply chains following a report by Sheffield Hallam University, which alleged that some automakers’ supply chains were linked to sub-suppliers using forced labor. [2]
- The report highlights how complex supply chains can obscure the origin of products made with forced labor. [3]
- This report and prior US government reports caution that audits conducted within China are subject to interference by the Chinese Communist Party(“CCP”), which maintains strict control over Chinese companies. [4]
- In January 2023, US automakers assured Chairman Wyden that they maintain robust compliance programs to prevent components made with forced labor from entering their supply chains. [5 ]
- However, in February 2024, Volkswagen Group of America, Inc. (“VW”) confirmed public reports that vehicles VW AG produced for the US market contained a component manufactured by a company added to the UFPLA Entity List on December 11,2023.6 Inclusion on the UFLPA Entity List carries a presumption that the company’s components were made with forced labor. In May 2024, BMW and Jaguar Land Rover disclosed to the Committee that they also imported components presumptively made with forced labor. [7]
- In the case of BMW and Jaguar Land Rover, both companies continued to import the components after the manufacturer was listed on the UFLPA Entity List in December 2023 and after the companies were informed in writing by a direct supplier in January 2024 that the components were manufactured by a listed entity. Furthermore, in April 2024, after the Committee explicitly asked both companies whether they ever “directly or indirectly sourced parts from JWD,” Jaguar Land Rover claimed to be unaware of its links to the manufacturer listed on the UFLPA Entity List, and BMW informed the Committee that JWD was not on their “supplier list.” [8]
The details of these disclosures heightened the Chairman’s concerns that automakers do not possess adequate visibility and compliance procedures to keep their supply chains free of forced labor. VW met with Committee staff and provided information about the events leading up to its early-January2024 voluntary disclosure to U.S. Customs and Border Protection (“CBP”). BMW and Jaguar Land Rover both made voluntary disclosures to CBP after the Committee contacted both companies and also contacted the supplier that provided them with the component presumptively made with forced labor. [9]
“Automakers are sticking their heads in the sand and then swearing they can’t find any forced labor in their supply chains,” Senator Wyden said. “Somehow, the Finance Committee’s oversight staff uncovered what multi-billion-dollar companies apparently could not: that BMW imported cars, Jaguar Land Rover imported parts, and VW AG manufactured cars that all included components made by a supplier banned for using Uyghur forced labor. Automakers’ self-policing is clearly not doing the job. I’m calling on Customs and Border Protection to take a number of specific steps to supercharge enforcement and crack down on companies that fuel the shameful use of forced labor in China.”
**Chinese Forced Labor Background
The brutal oppression of ethnic Uyghurs in Xinjiang by the CCP, which includes systemic forced labor, has been classified by the State Department as genocide and a crime against humanity.[10] The CCP has sought to forcibly reduce the birth rate among Uyghurs, and has placed restrictions on Uyghur clothing, grooming, traditional customs, and religious practice. [11] The CCP has detained over 1 million Uyghurs and other Muslim minorities in “reeducation centers,” some of which have been converted to high-security prisons.[12] Uyghurs in these facilities are subject to “threats of physical violence, forcible drug intake, physical and sexual abuse, and torture to force detainees to work in adjacent or off-site factories or worksites.”[13] Efforts to forcibly relocate Uyghurs and other Turkic Muslim communities from their homes in rural areas to urban areas to work in factories are known as “Labor Transfer Programs.”[14]
Section 307 of the Trade Act of 1930 prohibits goods produced with forced labor from entering the US market.[15] Section 307 has typically been enforced on a case-by-case basis when CBP issues a“Withhold Release Order” (“WRO”) citing forced labor at a particular factory.[16] Recognizing the systemic use of forced labor in Xinjiang, in January 2021, CBP issued region- and sector-wide WROs on cotton, tomatoes, and other downstream products from the region.[17]
In December 2021, Congress passed – and President Biden signed into law – the UFLPA, which strengthened America’s commitment to combating forced labor in China.18 The UFLPA created a rebuttable presumption that goods mined, produced, or manufactured wholly or in part in Xinjiang or by an entry on the UFLPA Entity List are made with forced labor and therefore prohibited from importation into the United States. Pursuant to the UFLPA, importers can overcome this presumption by presenting clear and convincing evidence that the good was not produced or manufactured in whole or in part with forced labor.[19] This evidentiary standard extends beyond the immediate factory to the components, sub-components, and raw materials.[20]
In 2022, the Sheffield Hallam Report detailed links between Chinese companies with operations in Xinjiang and global automakers that use products made in China, including metals, batteries, wiring and wheels.21 The Sheffield Hallam Report and others like it prompted Chairman Wyden to initiate an investigation into the automotive industry [22] that uncovered a severe lack of visibility into supply chains, particularly in China.
The Committee’s investigation focused on the procedures used by major automakers (original equipment manufacturers or “OEMs”) and their direct suppliers (“tier 1 suppliers”) to identify forced labor within their supply chains. Throughout the investigation, most automakers and their tier 1 suppliers assured the Committee that they maintain robust due diligence programs that ensure that their supply chains, which contain thousands of suppliers and subsuppliers, [23] are free of forced labor. [24]
Inevitable Senate Finance Committee Footnotes
For the absent Footnotes in this AutoInformed story (edited for space) see Senate Finance Committee Footnotes
- 19 U.S.C. 1307, (Defining forced labor as “all work or service which is exacted from any person under the menace of any penalty for its non-performance and for which the worker does not offer himself voluntarily”).
- Driving Force: Automotive Supply Chains and Forced Labor in the Uyghur Region, Sheffield Hallam University Helena Kennedy Centre for International Justice, Dec. 2022, https://www.shu.ac.uk/helena-kennedy-centre-international-justice/research-and-projects/all-projects/driving-force. (Hereinafter: Driving Force).
- Id missing
- 4 Id., Risks and Considerations for Businesses with Supply Chain Exposure to Entities Engaged in Forced Labor and other Human Rights Abuses in Xinjiang, Xinjiang Supply Chain Business Advisory, July 1, 2020, https://www.state.gov/wp-content/uploads/2020/07/Xinjiang-Supply-Chain-Business-Advisory FINAL For-508-508.pdf.
- Letters to Chairman Wyden from American Honda Motor Co., Inc., Ford Motor Company, General Motors Company, Stellantis N.V., Tesla, Inc., Toyota Motor North America, Inc., Mercedes-Benz USA, LLC, Volkswagen Group of America, Inc.
- Senate Finance Committee meeting with Volkswagen Group of America, Inc., February 2024.
- Email and subsequent call from outside counsel for BMW of North America to Ryder Tobin, Majority Staff, Senate Finance Committee, May 6, 2024; email and subsequent call from outside counsel for Jaguar Land Rover North America to Ryder Tobin, Majority Staff, Senate Finance Committee, May 7, 2024.
- missing
- Email from Ryder Tobin, Majority Staff, Senate Finance Committee, to Jaguar Land Rover North America, April 9, 2024; email from Jaguar Land Rover North America to Ryder Tobin, Majority Staff, Senate Finance Committee to, April 16, 2024; email from Ryder Tobin, Majority Staff, Senate Finance Committee, to BMW Group, April 9, 2024 (asking, among other questions, “[h]as BMW ever directly or indirectly sourced parts from JWD?”); email from BMW Group to Ryder Tobin, Majority Staff, Senate Finance Committee, April 10, 2024 (responding that “[w]e don’t have this company on our supplier list”). BMW clarified on April 25, 2024 that “BMW does not source directly from JWD. However, based on our current findings, a supplier of BMW has sourced indirectly from JWD and we are in the process of addressing this matter.” Email from BMW Group to Ryder Tobin, Majority Staff, Senate Finance Committee, April 25, 2024. BMW asserts that its April 10, 2024 response “claimed, accurately, that JWD was not a tier 1 supplier,” and also asserts that BMW began the process of stopping imports of affected products on April 5, 2024. Email from outside counsel to BMW Group to Ryder Tobin, Majority Staff, Senate Finance Committee, May 16, 2024.
- Email from outside counsel for BMW of North America to Ryder Tobin, Majority Staff, Senate Finance Committee, May 6, 2024; email from outside counsel for Jaguar Land Rover North America to Ryder Tobin, Majority Staff, Senate Finance Committee, May 7, 2024.
- 10 China Primer: Uyghurs, Congressional Research Service, September 22, 2023, https://www.crs.gov/Reports/IF10281?source=search (Hereinafter: China Primer) ; Forced Labor in China’sXinjiang Region, U.S. Department of State Office to Monitor and Combat Trafficking in Persons, July 2021, https://www.state.gov/forced-labor-in-chinas-xinjiang-region/. (Hereinafter: (Forced Labor in Xinjiang Region).
- 11 China Primer; Risks and Considerations for Businesses with Supply Chain Exposure to Entities Engaged in Forced Labor and other Human Rights Abuses in Xinjiang, Xinjiang Supply Chain Business Advisory, July 1, 2020,
- https://www.state.gov/wp-content/uploads/2020/07/Xinjiang-Supply-Chain-Business-Advisory FINAL For-508-508.pdf.
- Asleep at the Wheel Car Companies’ Complicity in Forced Labor in China, Human Rights Watch, February 1, 2024.
Forced Labor Official Vehicles – BMW, Jaguar Land Rover, VW
The U.S. Senate Finance Committee* in a report published today about its investigation into links between US automakers and forced labor within the People’s Republic of China** found exposure to forced labor [1] in the supply chains of major automakers, including BMW Group (“BMW”), Jaguar Land Rover and its wholly-owned sales subsidiary Jaguar Land Rover North America (“Jaguar Land Rover”), and Volkswagen.
“The Committee’s investigation has determined that BMW manufactured and imported vehicles containing parts presumptively made with forced labor; Jaguar Land Rover imported parts presumptively made with forced labor; and VW manufactured vehicles for the US market with parts presumptively made with forced labor and has ongoing business ties to manufacturing in the Xinjiang Uyghur Autonomous Region (“Xinjiang”).”
Importing goods made with forced labor to the United States has been illegal since the 1930s. Recognizing the systematic, government-sanctioned use of forced labor in the Xinjiang region of China, the Uyghur Forced Labor Prevention Act (UFLPA) in 2021 strengthened enforcement of the law with respect to facilities in Xinjiang and other entities identified as having been complicit in China’s forced labor scheme.
The Finance Committee also found
*Investigation Background
The details of these disclosures heightened the Chairman’s concerns that automakers do not possess adequate visibility and compliance procedures to keep their supply chains free of forced labor. VW met with Committee staff and provided information about the events leading up to its early-January2024 voluntary disclosure to U.S. Customs and Border Protection (“CBP”). BMW and Jaguar Land Rover both made voluntary disclosures to CBP after the Committee contacted both companies and also contacted the supplier that provided them with the component presumptively made with forced labor. [9]
“Automakers are sticking their heads in the sand and then swearing they can’t find any forced labor in their supply chains,” Senator Wyden said. “Somehow, the Finance Committee’s oversight staff uncovered what multi-billion-dollar companies apparently could not: that BMW imported cars, Jaguar Land Rover imported parts, and VW AG manufactured cars that all included components made by a supplier banned for using Uyghur forced labor. Automakers’ self-policing is clearly not doing the job. I’m calling on Customs and Border Protection to take a number of specific steps to supercharge enforcement and crack down on companies that fuel the shameful use of forced labor in China.”
**Chinese Forced Labor Background
The brutal oppression of ethnic Uyghurs in Xinjiang by the CCP, which includes systemic forced labor, has been classified by the State Department as genocide and a crime against humanity.[10] The CCP has sought to forcibly reduce the birth rate among Uyghurs, and has placed restrictions on Uyghur clothing, grooming, traditional customs, and religious practice. [11] The CCP has detained over 1 million Uyghurs and other Muslim minorities in “reeducation centers,” some of which have been converted to high-security prisons.[12] Uyghurs in these facilities are subject to “threats of physical violence, forcible drug intake, physical and sexual abuse, and torture to force detainees to work in adjacent or off-site factories or worksites.”[13] Efforts to forcibly relocate Uyghurs and other Turkic Muslim communities from their homes in rural areas to urban areas to work in factories are known as “Labor Transfer Programs.”[14]
Section 307 of the Trade Act of 1930 prohibits goods produced with forced labor from entering the US market.[15] Section 307 has typically been enforced on a case-by-case basis when CBP issues a“Withhold Release Order” (“WRO”) citing forced labor at a particular factory.[16] Recognizing the systemic use of forced labor in Xinjiang, in January 2021, CBP issued region- and sector-wide WROs on cotton, tomatoes, and other downstream products from the region.[17]
In December 2021, Congress passed – and President Biden signed into law – the UFLPA, which strengthened America’s commitment to combating forced labor in China.18 The UFLPA created a rebuttable presumption that goods mined, produced, or manufactured wholly or in part in Xinjiang or by an entry on the UFLPA Entity List are made with forced labor and therefore prohibited from importation into the United States. Pursuant to the UFLPA, importers can overcome this presumption by presenting clear and convincing evidence that the good was not produced or manufactured in whole or in part with forced labor.[19] This evidentiary standard extends beyond the immediate factory to the components, sub-components, and raw materials.[20]
In 2022, the Sheffield Hallam Report detailed links between Chinese companies with operations in Xinjiang and global automakers that use products made in China, including metals, batteries, wiring and wheels.21 The Sheffield Hallam Report and others like it prompted Chairman Wyden to initiate an investigation into the automotive industry [22] that uncovered a severe lack of visibility into supply chains, particularly in China.
The Committee’s investigation focused on the procedures used by major automakers (original equipment manufacturers or “OEMs”) and their direct suppliers (“tier 1 suppliers”) to identify forced labor within their supply chains. Throughout the investigation, most automakers and their tier 1 suppliers assured the Committee that they maintain robust due diligence programs that ensure that their supply chains, which contain thousands of suppliers and subsuppliers, [23] are free of forced labor. [24]
Inevitable Senate Finance Committee Footnotes
For the absent Footnotes in this AutoInformed story (edited for space) see Senate Finance Committee Footnotes