US blocks shipment of Uniqlo shirts on Xinjiang forced-labour concerns

There were 47 Uniqlo stores in the US as of April. PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - The US customs agency blocked a shipment of Japanese fashion retailer Uniqlo's shirts in January for violating an order prohibiting imports of items suspected to be produced by forced labour from China's state-owned Xinjiang Production and Construction Corps.

The blockage of Uniqlo's cotton men's shirts, which happened at the Port of Los Angeles, was revealed in a US Customs and Border Protection document dated May 10 in which the agency denied an appeal by Uniqlo to release the shirts.

Shares in the Japanese apparel maker fell as much as 2.6 per cent in early Tokyo trading Thursday.

Uniqlo is the main brand of Asia's largest apparel retailer, Fast Retailing, and founded by Japan's richest man, Tadashi Yanai. The US customs document notes that Uniqlo had argued and provided proof that the raw cotton used to produce the shirts didn't originate from Xinjiang Production and Construction Corps.

Still, Uniqlo failed to provide enough information to establish the items were not produced in part by forced labour in China's far west Xinjiang region, according to the agency.

"Uniqlo is disappointed by the recent decision from the US Customs and Border Protection agency," Fast Retailing said in a statement Wednesday, adding that it had submitted paperwork to the US customs showing its products met all the import requirements.

'Potential violations'

The company "has strong mechanisms in place to identify any potential violations of human and worker rights," the statement said. "If we find evidence of forced labour or any other human right abuses at any of our suppliers, we cease to do business with that supplier."

It is not clear if the US has blocked other shipments from Uniqlo or other brands under the order issued by the Trump administration in December. A search of previous rulings from US customs showed no other documents related to the recent actions to prohibit Xinjiang cotton.

The US, European Union and UK have placed sanctions on Chinese officials and goods over alleged human-rights abuses against Uighurs in Xinjiang, which the Biden administration has said amounts to genocide. China denies any forced labour, calling it the "biggest lie of the century," and says its policies are lifting the region out of poverty, boosting the economy and countering extremism.

Chinese Foreign Ministry Spokesman Zhao Lijian reiterated on Wednesday that forced labour is not used in Xinjiang and accused the US of "bullying."

"Relevant businesses should stand up and oppose the unjustified US behaviour," he said in a regular press briefing.

Global apparel makers have been caught up this year in the controversy surrounding cotton sourced from Xinjiang, with Chinese consumers boycotting foreign brands critical of China's actions and Western governments like the US cracking down on items sourced from the region.

The geopolitical turmoil has added uncertainty for apparel companies that had been betting on China to fuel future growth.

Uniqlo hasn't been a key target of boycotts in China compared to rivals such as Hennes & Mauritz.

Yanai, who is also Fast Retailing's chief executive officer, has repeatedly declined to comment on Xinjiang, saying the company doesn't involve itself in political issues.

There were 47 Uniqlo stores in the US as of April. Fast Retailing has about 809 Uniqlo stores in mainland China, which make up about a fifth of revenue for the company.

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