Xinjiang: deadline passes for US firms to cut XPCC from supply chains

The deadline has passed for American entities to comply with human rights sanctions and rid their supply chains of ties to the sprawling Xinjiang Production and Construction Corps (XPCC) and its network of majority-owned subsidiaries.

XPCC, a quasi-military entity estimated to employ 12 per cent of Xinjiang’s population and generate 17 per cent of its cotton-heavy economy, was sanctioned under the Magnitsky Act on July 31 by the US Treasury Department’s Office of Foreign Assets Control (OFAC) in connection “with serious rights abuses against ethnic minorities” in the northwestern Chinese region.

XPCC has been accused of using forced labour by Uygurs and other Muslim minority groups throughout its various supply chains. Experts say it is impossible to do business with China’s cotton and textile industries without also engaging with XPCC in some way.

The US Treasury Department’s sanctions initially gave companies until September 30 to cut ties with the XPCC, but the deadline was extended by two months, to Monday, after industry groups argued that they needed more time because the Xinjiang supply chain was too opaque for them to quickly comply.

As the extended deadline approached, the US Treasury Department received a negligible number of requests for another extension, an official familiar with US policy on Xinjiang told the Post.

“2,114 of these companies are based in the US and/or appear in US official public records. 71 of these US-linked companies are within 10 layers of ownership from the XPCC,” read a Sayari note on XPCC, although it was unclear how many of these corporate stakes amounted to the 50 per cent ownership level that would make transacting with them a breach of OFAC sanctions.