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27 Jul 2022

Ji Siqi , Kandy Wong and Ananta Agarwal - South China Morning Post (Hong Kong)

Bangladesh and Vietnam: Businesses alarmed over risk of 'cotton laundering' following US Xinjiang cotton ban

"Beyond China: US’ Xinjiang cotton ban has far-reaching implications, even for Asian alternatives" 27 July 2022

For garment manufacturers in South and Southeast Asia, a sweeping United States ban on all Xinjiang products – including cotton – may initially seem like a windfall, given its smothering effect on China’s role as the world’s top textile maker.

But the reality is far more complicated, as the global textile supply chain is so deeply intertwined that what looks to be a potential boon could instead be a crushing burden.

The concern came into the spotlight as the Bangladesh Garment Buying House Association (BGBA) asked its members last month to be cautious about sourcing raw materials imported from the Xinjiang Uygur autonomous region after Washington’s Uygur Forced Labour Prevention Act came into effect.

Kazi Iftaquer Hossain, president of the non-profit BGBA, told the Post that although the act has not yet impacted the Bangladeshi garment industry, it may still face setbacks due to the US’ import restrictions. [...]

But for countries such as Vietnam and Bangladesh, even though they have become increasingly competitive in terms of apparel makers sourcing Western markets, they still heavily rely on China for fabric and yarn, especially the high-end materials. [...]

As a result, campaign groups and some Western politicians have accused manufacturers of “cotton laundering” in places such as Vietnam and Bangladesh, for serving as intermediaries in cotton garment production. [...]

A Chinese textile manufacturer who owns a factory in Vietnam said some downstream clients have required documents on the origin of products. And in such cases, manufacturers have to go through a lengthy due-diligence process. [...]

He said it is hard to distinguish the cotton products entering Vietnam from different sources because they may have been mixed together while being transported at sea. Suppliers may do this so they can deceptively label Xinjiang cotton as coming from elsewhere, to circumvent the US law. [...]

Part of the following timelines

China: 83 major brands implicated in report on forced labour of ethnic minorities from Xinjiang assigned to factories across provinces; Includes company responses

China: Mounting concerns over forced labour in Xinjiang

Brands face boycott in China over decision not to source Xinjiang cotton due to allegations of forced labour

USA: Uyghur Forced Labor Prevention Act comes into effect