What does this mean for your supply chain?
On January 13, 2021 the United States Customs and Border Protection expanded the blanket Withhold Release Order (WRO) initially issued on December 2, 2020 and will detain all shipments containing cotton and cotton products originating from the Xinjiang Uyghur Autonomous Region (XUAR) and now includes tomato products. This potentially affects cotton products from countries other than China that use Chinese cotton inputs such as cotton fabric. Britain also announced they will tighten laws on imports linked to XUAR human rights abuses.
On December 23, 2021, President Biden signed into law the Uyghur Forced Labor Prevention Act, which prohibits the importation of all products with material or labor associated with the XUAR.
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These announcements from both sides of the Atlantic highlight the urgency with which companies must act to ensure their products are not stopped at the border. According to the US Customs and Border Protection, the importer of record is responsible to prove its products do not contain any material, in whole or part, sourced from XUAR. If suspected and unable to show verifiable proof, the importer has three options:
1) Take the products out of the US market and export them somewhere else.
2) Destroy the merchandise.
3) Abandon the merchandise.
All three are costly, both financially and in the minds of consumers. Today’s consumers want to support brands that are ethical towards the treatment of workers and sustainable, good for the environment. Many companies tout their Corporate Social Responsibility initiatives however few can measure the impact of their supply chain beyond the first or second tier in the network. How the cotton is picked, or the yarn is spun, where the tomatoes are sourced, or silica is mined is more a matter of faith. The vast majority of companies do not have the capability to show evidence that each tier of their supply chain meets the ethical and sustainable standards they espouse, and their customers expect.
The latest developments from the United Kingdom and United States show there is strong action being taken to change the way materials are sourced. Now, it is up to supply chain leaders to ensure they can prove through a digital thread they are in compliance across every link in their complex, global supply chain.
How ready are you?
EVP, Industry Principal, Logility Mark Burstein is a seasoned expert in fashion and retail working with the world’s most renowned brands. He is active in industry organizations including the National Retail Federation (NRF) and sits on the board of the American Apparel & Footwear Association (AAFA), the California Fashion Association and Goodwill Industries. He earned an MBA from Emory University and a bachelor’s degree in Finance from the University of Florida.