Another US law that will harm consumers

Another US law that will harm consumers

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by Moon of Alabama.

Today, the United States, already suffering from high inflation caused by a lack of supply, launches another round of the most stupid sanctions:

“A new law, the Uyghur Forced Labor Prevention Act (ETFO), comes into effect on Tuesday in the United States and prohibits the entry into the country of products made in Xinjiang or with links to labor programs in this country. region. It requires importers with any connection to Xinjiang to produce documents proving that their products, and all the raw materials with which they are made, are free from forced labor; a tricky business given the complexity and opacity of Chinese supply chains. …

In theory, the new US law should block all products made with raw materials associated with Xinjiang until they are proven to be free from slavery or coercive labor practices. But it remains to be seen whether the US government is ready or able to refuse such an array of foreign products. »

The 12 million Uighurs live mainly in southern China’s Xinjiang province. The region is arid and there is not enough water for a growing population. Over the years, this has led to poverty, social unrest and, with the help of some Saudi-trained Wahhabi preachers, terrorism against non-Wahhabis.

The Chinese government has launched a large-scale program to solve the problem once and for all. He has subsidized companies to move their production facilities to Xinjiang. For geographical reasons, these are now mainly in the northern part of Xinjiang. The government also organized large camps for vocational and language training. Once people moved there, they were offered jobs in the new factories where they work in return for normal wages.

The United States’ anti-China propaganda campaign claims that these Uyghurs were coerced into their new jobs and calls it “forced labor”. This is however not the case.

Working in an industry away from home is normal in China. This is the reason why every year during the Spring Festival season, 300 million people in China travel to reunite with their families.

Real forced labor is what we see in the US prison industry where prisoners have no choice but to work for pennies that the prison will eventually claw back due to the absurd prices of petty basic necessities that prisoners have to pay for.

It is likely that the Biden administration will apply the new law to many more products.

Domestic producers competing with Chinese products can complain to the Commerce Department, which will then have to hold imports at the border, launch an investigation and possibly seize the products.

This is exactly what Auxin, a small American solar panel producer, did in a tariff case that caused chaos in the sector:

The investigation will reduce planned solar installations for 2022 and 2023 by 46% and could cost more than 100,000 jobs in the solar sector if the ministry imposes the tariffs, according to an analysis published yesterday by the Solar Energy Industries. Association (SEIA), which organized the meetings of the Congress. …

The investigation is “already having quite a devastating impact,” Abigail Ross Hopper, President and CEO of SEIA, told The Climate 2022.

The new law will replace a Detention and Release (ORL) Order that the US Customs and Border Protection (DPF) issued during the Trump administration in January 2021. The ORL applied to cotton products from Xinjiang and caused some chaos in the garment industry.

The new ETFO law is much broader and will affect many more products. Many raw materials, such as lithium and nickel, are produced in Xinjiang and go into many downstream products:

“Xinjiang Nonferrous and its subsidiaries have partnered with Chinese authorities to welcome hundreds of these workers [ouïghours] in recent years, according to posts proudly posted in Chinese on the company’s social media account. These workers were eventually sent to conglomerate mines, a smelter, and factories that produce some of the most sought-after minerals on earth, including lithium, nickel, manganese, beryllium, copper, and gold. …

It is difficult to know precisely where the metals produced by Xinjiang Nonferrous go. But some have been exported to the United States, Germany, the United Kingdom, Japan, South Korea and India, according to company declarations and customs records. And some went to major Chinese battery makers who, in turn, supply, directly or indirectly, major US entities, including automakers, energy companies and the US military, according to Chinese news reports. . »

The bureaucratic efforts that importers in the solar industry and other sectors will have to go through to avoid being punished under the new law are considerable:

“The DPF published the ETFO guidelines last week, which include a section on polysilicon imports. In order to comply with ETFO, the DPF said solar companies must:

  • Provide complete supply chain documentation that lists all entities involved in the exported product.
  • Provide a flowchart describing each stage of production and identify the region from which each material originates.
  • Provide a list of all entities associated with each stage of production, even if the exporting company has not worked directly with them.

The DPF guidelines also say that solar companies that source polysilicon from both inside and outside Xinjiang risk being blocked, as it may be more difficult to verify that the products have not gone wrong. not mixed with Xinjiang polysilicon at any point in the manufacturing process. »

For small importers, it will be impossible to do the above. Only large companies can afford to search and provide all this data and take the risk of importing products that could be confiscated at the border. They will of course ask their customers to pay for all this.

For the American consumer, this not only means higher prices, but probably more limited access to the products they need or want. US industry is not in a state where it can supply China-wide.

To avoid controls, Chinese producers could possibly move their factories. But they will move to South Asian countries and not to the United States.

I don’t understand why the Biden administration, which has a “green agenda,” thought that was a good idea.

source: Moon of Alabama

translation Wayan, proofread by Hervé, for Le Saker Francophone