Industry News

Report Highlights Challenges to Auto Industry in Excluding Products from Xinjiang

Dec. 13, 2022
By: David G. Forgue


Earlier in December a report was issued by human rights advocates based in the United Kingdom. The report focused on the deep and abiding ties between the global automotive industry and companies producing goods in the Xinjiang region of China. This is problematic for global automotive companies because both the United States’ Uyghur Forced Labor Prevention Act (“UFLPA”) and proposed European rules against importing products made with forced labor have implications for articles made in Xinjiang.

Global auto manufacturing is an enormous business, with complex supply chains for articles as diverse as glass, rubber, electronics, steel, and aluminum, among others. Over 60 million new automobiles are sold worldwide every year. The report indicates that by 2026 the auto parts market will be worth $2 trillion. Changes in automotive supply chains are difficult to begin and consequential when they happen.

Over the last 20 years the Chinese auto parts business has grown to a $45 billion industry. Even to the extent the resources needed for that transformation were not located in Xinjiang, processing and other activities are focused in the region. The report identifies major facilities in industries like steel, aluminum, copper, batteries, electronics, rubber, and textiles like floor mats. Taken together, these industries make up a very large percentage of the materials used to make a complete vehicle.

Given the deep inroads into the auto parts industry made by companies related to the Xinjiang region, the question is what companies should do to avoid legal and ethical exposure. This is important because the report identifies essentially every major auto producer in North America, Europe, and Asia as having supply chain exposure. The report is well worth reviewing, since it is incredibly comprehensive and reflects tremendous expertise.

That being said, as the global auto companies have already experienced, it is easier to seek to end supply agreements with ties to Xinjiang throughout the supply chain than to do so. Because of the mix of raw materials and finished goods companies have found that it is necessary to review multiple tiers of suppliers, often far from any supplier with which the company has direct contact. Nevertheless, many global automotive companies have undertaken (but perhaps not completed) these efforts. It is likely that they will be working on these issues for the foreseeable future.

If you have any questions about the long and difficult process of reviewing your supply chain or have questions about the application of forced labor import laws to your imports, please contact any attorney at Barnes, Richardson & Colburn, LLP.