US Updates Xinjiang Business Advisory, Highlights Export Control Due Diligence
The U.S. updated its Xinjiang Supply Chain Business Advisory, highlighting the increasing supply chain, sanctions, labor and export control risks of doing business in the Xinjiang region. The July 13 update, which builds and expands on the original advisory issued last year (see 2007010040), says China is committing genocide through its human rights violations against Muslim minorities, provides guidance to businesses that may invest in implicated Chinese companies, updates a list of U.S. enforcement actions related to Xinjiang and "strengthens" recommendations for companies that risk doing business in the region.
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The guidance, issued by the Office of the U.S. Trade Representative and the State, Treasury, Commerce, Homeland Security and Labor departments, said businesses and people that don’t “exit supply chains, ventures, and/or investments connected to Xinjiang could run a high risk of violating U.S. law.” Companies should make sure they are implementing “heightened human rights due diligence” in their compliance programs, which includes checks on exporting surveillance systems to Xinjiang and other products that officials use to suppress Uyghurs and other minorities.
Like the original guidance, the updated version continues to name specific technologies that are subject to export restrictions, such as advanced surveillance systems and products equipped with artificial intelligence. The guidance also stressed that exporters of surveillance products should conduct due diligence to “prevent the misuse of their technology” and names a range of specific items, including goods used for genetic collection and analysis, microchips and microprocessors, tracking technology and more.
As part of due-diligence efforts, companies should monitor end-users of their products “to reduce the likelihood” that they are being used for human rights violations. The guidance points to Commerce’s Entity List and the Treasury’s Non-Specially Designated Nationals Chinese Military Industrial Complex Companies List for companies that may be barred from receiving U.S. technology.
U.S. investors should also realize that investments in Chinese surveillance companies “facilitate repression and serious human rights abuses.” The same risks are present in joint ventures with Chinese government officials and Chinese companies whose intellectual property “has been known” to aid the government’s surveillance technology development efforts. Companies should be careful about allowing Chinese government officials to “access” genetic databases and/or participate in facial recognition research and inviting them to conferences where these issues are discussed.
The guidance also contains about 15 pages of annexes, including recent sanctions and export control enforcement actions related to illegal transactions involving Xinjiang. They also include information on Chinese industries and supply chains that use forced labor and a list of U.S. and foreign government guidance resources.