On 12 January 2021, UK Foreign Secretary, Dominic Raab, announced a package of measures intended to ensure that British organisations in the public and private sector are not complicit in – or profiting from – human rights violations against Uyghur Muslims in China’s Xinjiang region.
The UK has worked in coordination with the Canadian government on the new measures, which were introduced in response to growing evidence of gross human rights violations, including extra-judicial detention and forced labour, in the Xinjiang region of China.
Announcing the measures in a statement to the House of Commons, the UK foreign Secretary stated that the aim of the measures is to ensure that “no company that profits from forced labour in Xinjiang can do business in the UK, and no UK business is involved in their supply chains.”
The measures reflect a number of recommendations the Conservative Human Rights Commission made to the UK government in its report on human rights in China, The Darkness Deepens: The Crackdown on Human Rights in China 2016 – 2020, which was published on 13 January 2021. The measures also build on a raft of US actions introduced to combat forced labour in China, which we discussed in greater detail in previous client alerts (here, here, here and here).
The new package of UK measures is comprised of the following four elements:
- Publication of Guidance to UK Business
The Foreign, Commonwealth and Development Office and Department for International Trade issued updated guidance to UK businesses on 12 January 2021 concerning the specific risks faced by companies with links to Xinjiang and underlining the challenges of conducting effective due diligence there.
Among other things, the guidance highlights that businesses:
- Directly or indirectly providing goods and services to authorities in Xinjiang are at risk of unintentionally facilitating human rights violations – the guidance identifies businesses that engage in joint-research and development activities in the fields of surveillance, biometrics or tracking technology as being at particular risk;
- With supply chain links to Xinjiang face particular reputational, economic and legal risks due to extensive and credible evidence of forced labour programmes targeting Uyghur and other ethnic minorities;
- Are strongly recommended to undertake careful and robust due diligence to ensure their operations do not directly or indirectly contribute to human rights violations and should be aware that conducting due diligence in Xinjiang is challenging due to limits on access for auditors and others, the likelihood that workers will be able to speak freely and the extent and severity of human rights violations occurring in the Xinjiang region.
In tandem with the publication of the guidance, the UK Foreign Secretary has announced a minister led campaign of business engagement to reinforce the need for UK businesses to take action to address the specific risks faced by companies with links to the Xinjiang region.
- Introduction of Financial Penalties for Failure to Publish Modern Slavery Statements
The UK Foreign Secretary also announced the introduction of financial penalties for organisations that fail to meet their statutory obligations to publish annual modern slavery statements under the UK Modern Slavery Act 2015 (MSA). The MSA currently requires commercial organisations that carry on all or part of a business in the UK with a total annual turnover of £36 million or more to publish a modern slavery statement reporting on the steps that they have taken during the financial year to ensure that slavery and human trafficking are not taking place in their business or supply chains.
This newly announced measure builds upon the UK government’s existing intention, announced in October 2020 and detailed in our previous blog post, to strengthen this reporting obligation by requiring subject commercial organisations’ modern slavery statements to include provisions on certain key topics, including due diligence and risk assessment measures to encourage openness about the steps those commercial organisations are taking to operate responsibly.
- Extension of Modern Slavery Act Transparency in Supply Chain Provisions to UK Public Bodies
Following the UK government’s announcement, in October 2020, of its intention to extend the reporting requirements under the MSA to UK public bodies that have budgets of £36 million or more, the UK Foreign Secretary announced that the UK government would provide guidance and support for all UK public bodies on using public procurement rules to exclude suppliers where there is sufficient evidence of human rights violations in supply chains.
- Urgent Review of Export Controls
Finally, the UK Foreign Secretary announced an urgent review of export controls as they apply specifically, geographically to the situation in Xinjiang to identify additional products that should be subject to export controls to prevent the export of any goods that could directly or indirectly contribute to human rights violations in the region.
Given the UK government’s increased focus on companies’ management of their forced labour and human rights risks and the growing evidence of concerted global action on these issues, companies should consider reviewing how their existing compliance programmes address the risks of forced labour and related human rights issues in their supply chains. Following a careful risk assessment, enhancements to pertinent policies and procedures, due diligence and audit processes, training and reporting and response mechanisms may be warranted.