The U.S. Customs and Border Protection (CBP) as issued a Withhold Release Order (WRO) on silica-based products made by Hoshine Silicon Industry based in Xinjiang, China, and its subsidiaries.
“This WRO is based on information reasonably indicating that Hoshine used forced labor to manufacture silica-based products,” CBP said. “As a result, personnel at all U.S. ports of entry have been instructed to immediately begin detaining shipments that contain silica-based products made by Hoshine or materials and goods derived from or produced using those silica-based products.”
This means that all of those products made by Hoshine will be stopped at the U.S. border and held by CBP.
Additionally, the U.S. Department of Commerce (DOC) announced that Hoshine Silicon Industry (Shanshan) Co., Ltd., Xinjiang Daqo New Energy Co., Ltd., Xinjiang East Hope Nonferrous Metals Co., Ltd., Xinjiang GCL New Energy Material Technology Co., Ltd., and the Xinjiang Production and Construction Corps (XPCC) have been added to the U.S. Entity List, saying they were for “accepting or utilizing forced labor in the implementation of the People's Republic of China's campaign of repression against Muslim minority groups in the Xinjiang Uyghur Autonomous Region.”
The WRO does not cover all silica products from China, but indications are that CBP could be collecting information that could lead to a broader application of the WRO. They followed that pattern previously relative to cotton and tomatoes and tomato products, originally targeting just the products from the XPCC and later they broadened it to all products from Xinjiang.
The South China Morning Post downplayed the potential impact on Hoshine, quoting Peng Peng, general secretary with the China New Energy Investment and Financing Alliance, as saying the U.S. market for Chinese solar panels is not that big. However, she also noted there were few alternatives outside of China for the products -- China produces about 76% of the world's polysilicon, with production bases mainly in Xinjiang, the Inner Mongolia autonomous region, Sichuan province and Yunnan province.
"I believe Chinese companies have been preparing for any U.S. sanctions since the trade war began. So, we need to think next about how to counter the U.S. sanctions by swapping the origin of production, by shifting orders within China," she said.
Predictably, the reaction within China has been critical of the U.S. actions. Commerce ministry spokesman Gao Feng repeated the Chinese stance that the “so-called forced labor issue” in Xinjiang is “completely contrary to the facts.” Gao also said the U.S. is “again using its state power to practice protectionism and bullying in the name of so-called human rights, which seriously damages the international economic and trade order and poses a serious threat to the security of the global supply chain.”
From China's Foreign Ministry, spokesman Zhao Lijian said, China will “make necessary responses to resolutely safeguard its own interests.”
The pressure on China is clearly rising from the U.S., but what is of even greater concern for China is if European countries follow suit. That could create even more potential pressure on China and Chinese businesses if they are blocked out of the EU market.
Already, some companies in Europe have opted to include provisions in contracts that require proof that no Xinjiang forced-labor cotton is involved in textiles or clothing items. That may be a tough task, but the fact companies are doing so is a clear signal that the issue is not going away.
So we will see. If the pressure mounts on China, their warnings of “protecting their interests” could take several forms, including actions against imports of U.S. products, something which needs to be closely watched, Washington Insider believes.