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8 Oct 2021

Jodi Xu Klein, South China Morning Post (Hong Kong)

USA: Court rejects Hong Kong shirtmaker Esquel Group's request to remove Xinjiang unit from entity list

"US judge rejects Esquel Group’s request to remove Xinjiang unit from ‘entity list’", 8 October 2021

A US federal judge has refused to lift trade restrictions on a subsidiary of Hong Kong-based textile company Esquel Group, which had been placed on the Commerce Department’s “entity list” for its activities in the Xinjiang Uygur autonomous region.

In his ruling on Wednesday, US District Judge Reggie B. Walton in Washington found that Esquel, one of the world’s biggest shirt makers, was not likely to succeed in its case against the department because it failed to show that Commerce had acted beyond its legal authority.

The rejection of a preliminary injunction does not kill Esquel’s case, but it dealt a blow to its subsidiary in Xinjiang, which has been unable to supply major clients like Nike, Patagonia and Tommy Hilfiger since being placed on the blacklist a year ago.

Commerce added Changji Esquel, the subsidiary, to the list a year ago, banning it from doing business in the US – part of a larger US campaign to sanction companies over alleged human rights abuses against Uygur Muslims in Xinjiang. [...]

“We intend to appeal the decision” and move forward with litigation “to seek an end to Changji Esquel’s mistaken listing”, Esquel said in a statement on Thursday.

“The court did not fully explain its rationale” and “we continue to believe that Changji Esquel’s original listing by the previous administration was unlawful and that it deserves to be removed from the entity list without further delay.

“No Esquel company has ever used, or will ever use, forced labour,” it added. [...]

On Thursday, Esquel said since the subsidiary ended up on the blacklist, the company “lost a significant portion of its annual revenue totalling hundreds of millions of dollars” that has resulted in the closure of two factories in Mauritius and the loss of more than 7,000 jobs worldwide. [...]

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