America’s Select Committee on the Chinese Communist Party, led by Chairman Mike Gallagher and Ranking Member Raja Krishnamoorthi, has released an interim report on the investigations into Chinese fast fashion brands Shein and Temu. These investigations were initiated alongside inquiries into Nike and Adidas. The report reveals alarming findings related to forced labour and exploitation of import rules.
The report highlights the exploitation of the ‘de minimis’ provisions by Shein and Temu, enabling them to avoid customs enforcement. Under this provision, most of their products valued under 800 dollars enter the United States without inspection or duties. Temu, in particular, has been found to have no system in place to ensure compliance with the Uyghur Forced Labour Prevention Act (UFLPA), raising concerns about products and fashion from forced labour entering consumer households.
Chairman Gallagher expresses shock at the findings, emphasising Temu's lack of effort in keeping its supply chains free from slave labor. He also highlights how Shein and Temu capitalise on the de minimis loophole, evading import taxes and sidestepping scrutiny. Gallagher calls for a thorough examination of this abused loophole, which he argues tilts the playing field against American companies.
Ranking Member Krishnamoorthi underlines the need for transparency by companies potentially profiting from CCP forced labour. The initial findings of the report reinforce the urgency of addressing these practices. Krishnamoorthi intends to strengthen laws like the UFLPA to put an end to forced labour and ensure accountability.
The report outlines four key findings
First, Temu and Shein are likely responsible for a significant portion of daily packages shipped to the United States under the de minimis provision, with a substantial share originating from China. Second, Temu's business model relies on the de minimis provision to avoid compliance with the UFLPA, utilising numerous Chinese suppliers to directly ship goods to American consumers. Third, Temu lacks a compliance system or audits to ensure adherence to the UFLPA. Lastly, Temu does not explicitly prohibit third-party sellers from trading products originating from the Xinjiang Autonomous Region.
In conclusion, Gallagher and Krishnamoorthi emphasise the need to address the issues highlighted in the report. They underscore Temu's failure to establish an effective compliance program and the significant reliance of Shein and Temu on the de minimis provision. The presence of forced labour in American imports is a serious concern, urging all companies operating in the United States to clean up their supply chains and refrain from contributing to the Uyghur genocide facilitated by forced labour.