A congressional investigation found that BMW, Jaguar Land Rover and Volkswagen purchased parts that came from a Chinese supplier that was prosecuted by the United States for participating in forced labor programs in Xinjiang, a region in China’s far west where the local population is subject to mass surveillance is suspended, arrests were reported.
Both BMW and Jaguar Land Rover continued to import components manufactured by the Chinese company into the United States in violation of American law, even after being notified in writing of the presence of banned products in their supply chain, the report said.
BMW has supplied at least 8,000 MINI vehicles with the part to the US after the Chinese supplier was added to the US government’s list of companies involved in forced labor in December. Volkswagen has taken steps to resolve the issue.
The investigation, launched in 2022 by Senate Finance Committee Chairman Ron Wyden of Oregon, a Democrat, highlights the risk to major automakers as the United States seeks to enforce a two-year-old law aimed at expelling goods from Xinjiang to block. The Uyghur Forced Labor Prevention Law prohibits the importation into the United States of goods made in whole or in part in Xinjiang unless the importer can prove that they were not made using forced labor.
In a statement, Mr. Wyden said that “automakers bury their heads in the sand and then swear they won’t find forced labor in their supply chains.”
“Somehow the Finance Committee’s oversight staff uncovered what multibillion-dollar companies apparently couldn’t: that BMW was importing cars, Jaguar Land Rover was importing parts, and VW AG was making cars that included all components made by a supplier to which the “Uyghur forced labor was prohibited,” he added. “Automakers’ self-regulation is clearly not enough.”
The part in question is called a LAN transformer and is part of a system that allows a vehicle’s electronic components to communicate with each other. The automakers did not purchase the component directly from Sichuan Jingweida Technology Group, also known as JWD, the Chinese manufacturer that allegedly used forced labor. Rather, it was part of an electronic unit that they had purchased from Lear Corp., a supplier of automotive electrical systems.
Lear said in a statement that it had no direct relationship with JWD but purchased the parts through another supplier. When Lear learned that JWD had been placed on the forced labor list, the company said, “We immediately notified our customers of products containing these components and worked with our supplier to expeditiously transfer the manufacturing of these components to another subcontractor. “”
It added: “We take these matters seriously and share the committee’s desire to combat forced labor.”
The Chinese government runs programs that send groups of people to Xinjiang to work at private companies and farms, and human rights experts say some of these arrangements are enforced. Reports published in recent years by researchers at the Australian Strategic Policy Institute and Sheffield Hallam University had linked JWD to government-sponsored labor transfer programs, including the transfer of hundreds of Xinjiang employees to the company in 2018. In December, the US government added JWD on a list of companies that have cooperated with the Xinjiang government in recruiting, promoting or hosting forced laborers.
Lear notified all three automakers in January that it had sold them the JWD portion. Volkswagen subsequently voluntarily told US customs officials that cars then en route to the US contained the part. The company arranged for the part to be replaced at U.S. ports before entering the country.
But the committee said BMW continued to import that part and thousands of MINI vehicles containing it even after receiving Lear’s letter until at least April 2024. BMW appeared to have stopped its imports only after the committee repeatedly questioned it about JWD. according to the report.
BMW said in a statement that it has taken steps to stop importing these components and will voluntarily replace the parts in vehicles containing these components. “BMW Group has strict standards and policies regarding employment practices, human rights and working conditions that all of our direct suppliers must follow,” the company said.
Jaguar Land Rover also received Lear’s letter in January, but told the committee that its North American subsidiary was not aware of it, according to the report. The company continued to import the JWD component until Lear reiterated the information to Jaguar Land Rover shortly after April 22.
In addition, Volkswagen continues to operate a factory in Xinjiang through a joint venture with a Chinese state-owned company. Volkswagen told the committee that an outside company had audited the facility and determined that forced labor would no longer exist in 2023, but declined to provide Congress with a full copy of the audit.
Jaguar Land Rover and Volkswagen did not respond to requests for comment.
China denies the existence of forced labor and human rights abuses in Xinjiang. According to the U.S. government, Chinese authorities in Xinjiang detained over a million ethnic Uighurs and other minorities in re-education centers from 2017 to 2019.
According to a Congressional Research Service report, high incarceration rates and many forms of political indoctrination continue today. The New York Times has also documented China’s mass detentions in Xinjiang.
China is the world’s largest car market and the fastest growing. The country accounted for about a third of cars sold by BMW and Volkswagen in the first quarter and about a fifth of Jaguar Land Rover’s sales.
But foreign automakers are struggling to maintain market share amid an onslaught of new Chinese competitors focused on electric vehicles. And it is becoming increasingly difficult for foreign automakers to maintain a good relationship with the Chinese government while complying with human rights standards in the United States and Europe.
Cars are made up of tens of thousands of components, and the JWD part lies several layers deep in the supply chain of these major automakers. Still, the Senate committee said the incidents underscore the inadequacy of current systems for identifying forced labor, such as questionnaires, self-certifications and limited audits of direct suppliers.
Richard Mojica, a customs lawyer at Miller & Chevalier, said automakers face an “enormous” task trying to trace their entire supply chains, in part because they rely heavily on working with direct suppliers, which is not always the case.
The United States “has not yet seized significant quantities of automobiles and automobile components,” he said. However, tightening government enforcement measures could prompt automakers and their suppliers to make these supply networks more urgent.
Companies that buy cotton, tomatoes, solar panels, essential minerals and other goods from China are also struggling with exposure to Xinjiang in their supply chains.
Last Thursday, the Biden administration added 26 Chinese textile companies to the Uyghur Forced Labor Prevention Act entity list, citing their ties to forced labor. Mr. Wyden said he would call on U.S. Customs to step up enforcement and crack down on violators.
Source link
2024-05-20 10:00:06
www.nytimes.com
