Senate inquiry finds BMW imported cars linked to forced labor in China

A congressional investigation found that BMW, Jaguar Land Rover and Volkswagen bought parts originating from a Chinese supplier flagged by the United States for participating in forced labor programs in China’s far western region of Xinjiang that are subject to mass surveillance of locals. Barriers.

Both BMW and Jaguar Land Rover continued to import parts made by the Chinese company into the US in violation of US law, even after being notified in writing of the presence of banned products in their supply chains, the report said.

BMW shipped at least 8,000 Mini vehicles to the US after the Chinese supplier was added to the US government’s list of companies participating in forced labor in December. Volkswagen has taken steps to fix this problem.

Investigation, launched in 2022 by Oregon Democrat Ron Wyden, chairman of the Senate Finance Committee, highlights the risk to major automakers as the U.S. tries to enforce a two-year-old law aimed at blocking goods from Xinjiang. The Uyghur Forced Labor Prevention Act prohibits the importation into the United States of goods made in whole or in part in Xinjiang, unless the importer can prove that they were not made with forced labor.

In a statement, Mr. “Automakers stick their heads in the sand and then swear they can’t find forced labor in their supply chains,” Wieden said.

“Somehow, the Finance Committee’s oversight staff found out what the multibillion-dollar companies apparently couldn’t: imported BMW cars, Jaguar Land Rover parts and VW AG manufactured cars all included components manufactured by a supplier banned from using Uyghur forced labor,” he said. was added. “Self-policing by automakers is clearly not working.”

The part in question is called a lane transformer, and it’s part of the system that allows a vehicle’s electronic components to communicate with each other. The automakers did not buy the component directly from Sichuan Jingweda Technology Group, also known as JWD, a Chinese manufacturer that allegedly used forced labor. Rather, it was part of an electronic unit they purchased from Lear Corporation, a supplier of automotive electrical systems.

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Lear said in a statement that it had no direct relationship with JWD, but bought parts through another supplier. When Lear learned that JWD was on the forced labor list, the company said, “We immediately notified our customers of products containing these components and worked with our supplier to quickly re-source production of these components to another sub-supplier. “

And, “We take these matters seriously and share the group’s desire to fight forced labour.”

The Chinese government runs programs that send people in Xinjiang to work in private companies and farms, and human rights experts say some of these arrangements are coercive. Reports published in the past few years by researchers at the Australian Strategic Policy Institute and Sheffield Hallam University have linked JWD to government-sponsored labor exchange programs, including the transfer of hundreds of Xinjiang residents to the company in 2018. In December, the US government added: JWD recruits, transports, or receives forced laborers for a list of companies that have worked with the Xinjiang government.

Lear announced in January that it had sold the JWD component to all three automakers. Volkswagen later voluntarily informed US customs agents that the part was present in cars in transit to the US. The company arranged for the area to be transferred at US ports before they entered the country.

But BMW continued to import the part and thousands of Mini vehicles containing it until at least April, even after receiving the letter from Lear, the group said. It seems that only after BMW questioned JWD several times, BMW stopped importing it.

BMW said in a statement that it has taken steps to stop imports of the parts and will voluntarily replace the parts in vehicles that have them. “BMW Group has strict standards and policies regarding employment practices, human rights and working conditions, which all our direct suppliers must follow,” the company said.

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Jaguar Land Rover received the letter from Lear in January but told the group its North American subsidiary had not been informed, the report said. After April 22, the company continued to import the JWD component until Lear informed Jaguar Land Rover again.

Jaguar Land Rover said it does not sell used parts on older vehicles and only imports them as replacements. The UK-based company said that when it learned the parts were on the forced labor list, it immediately stopped shipping them and earmarked them for destruction.

“JLR takes human rights and forced labor issues seriously and has an active program of human rights protection and anti-slavery initiatives,” the company said in a statement.

Volkswagen continues to maintain a facility in Xinjiang through a joint venture with a Chinese state-owned company. Volkswagen told the group that an outside firm audited the facility and found it to be free of forced labor by 2023, but declined to provide Congress with a full copy of the audit.

Volkswagen said in a statement that “we replaced the part as quickly and responsibly as possible” and complied with the law.

“Volkswagen takes allegations of human rights violations very seriously and is committed to preventing the use of forced labor in our supply chain,” the company said.

China denies the existence of forced labor and human rights abuses in Xinjiang. According to the US government, from 2017 to 2019, Chinese authorities in Xinjiang detained more than one million Uyghurs and other minorities in re-education centers.

Today, high levels of incarceration and many forms of political indoctrination continue A statement From the Congressional Research Service. The New York Times has also documented China’s mass detention program in Xinjiang.

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China is the world’s largest car market and growing rapidly. The country accounted for a third of all cars sold by BMW and Volkswagen and a fifth of Jaguar Land Rover sales in the first quarter.

But foreign carmakers are struggling to retain market share amid an onslaught of new Chinese rivals focused on electric vehicles. It has become difficult for foreign carmakers to maintain good relations with the Chinese government while adhering to US and European human rights standards.

Cars have tens of thousands of components, and the JWD part is several layers deep in the supply chain of these major automakers. However, the incidents underscore the inadequacy of current systems used to identify forced laborers, such as the Senate panel, questionnaires, self-reporting and limited audits of direct suppliers.

Richard Mojica, a customs attorney at Miller & Chevalier, said automakers faced an “enormous” task in trying to trace their entire supply chains because they depend heavily on cooperation from direct suppliers, which doesn’t always happen.

The United States “still does not detain automobiles and auto components in meaningful amounts,” he said. But an improvement in government enforcement could push carmakers and their suppliers to map out these supply networks more urgently.

Companies that buy cotton, tomatoes, solar panels, critical minerals and other commodities from China are also grappling with Xinjiang’s exposure to their supply chains.

On Thursday, the Biden administration added 26 Chinese textile companies to the Uighur Forced Labor Ban. Company list, citing their ties to forced labor. Mr. Wyden said he is calling on US Customs to step up enforcement and crack down on violators.

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