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Senate investigation finds imported BMWs linked to forced labor in China

Senate investigation finds imported BMWs linked to forced labor in China

A congressional investigation has found that BMW, Jaguar Land Rover and Volkswagen purchased parts sourced from a Chinese supplier who has been flagged by the United States for participating in forced labor programs in Xinjiang, a region in far western China where local residents are subject to mass surveillance and detentions.

The report said that BMW and Jaguar Land Rover continued to import components manufactured by the Chinese company into the United States in violation of US law, even after being informed in writing of the presence of banned products in their supply chain.

BMW has shipped to the US at least 8,000 MINI vehicles containing the part after the Chinese supplier was added in December to a US government list of companies involved in forced labour. Volkswagen has taken steps to correct the problem.

Investigation, which was initiated in 2022 by Senate Finance Committee Chairman Ron Wyden of Oregon, a Democrat, highlights the risks facing major automakers as the United States tries to enforce a two-year-old law aimed at blocking goods from Xinjiang. The Uyghur Forced Labor Prevention Act prohibits the import of goods made wholly or partly in Xinjiang into the United States, unless the importer can prove they were not made with forced labor.

“Automakers bury their heads in the sand and then swear they can’t find any forced labor in their supply chains,” Mr. Wyden said in a statement.

“Somehow, the Finance Committee’s oversight staff uncovered what multibillion-dollar companies apparently couldn’t: that BMW imported cars, Jaguar Land Rover imported parts, and VW AG made automobiles. “All contain ingredients made by a supplier banned for using Uyghur forced labor.” he added. “Automakers’ self-policing is clearly not doing the job.”

The part in question is known as a LAN adapter 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 was said to have used forced labor. Rather, it was part of an electronic unit they purchased from Lear Corp., a supplier of automotive electrical systems.

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Lear said in a statement that it did not have a direct relationship with JWD, but purchased the parts through another supplier. When Lear learned that JWD had been added to the forced labor list, the company said: “We immediately notified our customers of the products containing these ingredients and worked with our supplier to expeditiously remanufacture these ingredients to another sub-supplier.”

She 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 in Xinjiang to work at private companies and farms, and human rights experts say some of these arrangements are imposed by coercion. Reports published in the past few years by researchers from the Australian Strategic Policy Institute and Sheffield Hallam University have linked JWD to government-sponsored labor relocation programs, including the transfer of hundreds of Xinjiang residents to the company in 2018. In December, the US government added JWD to a list Companies that worked with the Xinjiang government to recruit, transfer, or receive forced labor.

Lear notified the three automakers in January that it had sold the JWD portion to them. Volkswagen subsequently voluntarily disclosed to US customs agents that cars en route to the United States contained this part. The company arranged to have the part replaced at US ports before it entered the country.

But the commission said that BMW, even after receiving its letter from Lear, continued to import that part and thousands of MINIs containing it until at least April 2024. BMW apparently stopped imports only after the committee repeatedly questioned it about JWD. According to the report.

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BMW said in a statement that it has taken steps to stop imports of components and will voluntarily replace parts in vehicles that contain them. “The BMW Group has strict standards and policies regarding employment practices, human rights and working conditions, which all our direct suppliers must follow,” the company said.

Jaguar Land Rover also received the letter from Lear in January, but told the committee that its North American subsidiary had not been informed, according to the report. The company continued to import the JWD component until shortly after 22 April, when Lear repeated the information to Jaguar Land Rover.

Jaguar Land Rover said the parts were used in older cars that were no longer for sale and were only imported as replacements. The British-based company said that when it learned that the pieces were on the forced labor list, it immediately stopped shipping them and designated them for destruction.

“JLR takes human rights and forced labor issues very seriously and has an active and ongoing program of human rights protection and anti-slavery measures,” the company said in a statement.

Volkswagen also continues to maintain a facility in Xinjiang through a joint venture with a Chinese state-owned company. Volkswagen told the committee that an outside company audited the facility and found it free of forced labor in 2023, but declined to provide Congress with a full copy of the audit.

China denies the existence of forced labor and human rights abuses in Xinjiang. According to the US government, from 2017 to 2019, Chinese authorities in Xinjiang detained more than 1 million ethnic Uyghurs and other minorities in re-education centers.

Today, high incarceration rates and many forms of political indoctrination persist, according to him a report From the Congressional Research Service. The New York Times has also documented China’s program of mass detentions in Xinjiang.

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China is the world’s largest and fastest growing automobile market. The country accounted for about a third of the cars sold by BMW and Volkswagen in the first quarter, and about a fifth of Jaguar Land Rover sales.

But foreign automakers are struggling to maintain market share amid an onslaught of new Chinese competitors focused on electric vehicles. It has become increasingly difficult for foreign automakers to maintain a good relationship with the Chinese government while adhering to human rights standards in the United States and Europe.

Cars contain tens of thousands of components, and the JWD part is several layers deep in the supply chain of major automakers. However, the Senate committee said these incidents underscore the inadequacy of current systems used to identify forced labor, such as questionnaires, self-reporting, and limited audits of direct suppliers.

Automakers face a “huge” task in trying to trace their entire supply chains, in part because they rely heavily on the cooperation of direct suppliers, which does not always happen, said Richard Mojica, a customs lawyer at Miller & Chevalier.

He said that the United States “has not yet seized cars and their components in large quantities.” But an uptick in government enforcement could push automakers and their suppliers to map out these supply networks more urgently.

Companies that buy cotton, tomatoes, solar panels, vital minerals and other goods from China also have difficulty navigating Xinjiang in their supply chains.

Last Thursday, the Biden administration added 26 Chinese textile companies to the Uyghur Forced Labor Prevention Law Entity list, citing their ties to forced labor. Mr. Wyden said he would call on US Customs to strengthen enforcement and take tough action against violators.