Last month the UK Foreign Secretary, Dominic Raab, announced UK Government action over the plight of the Uyghur Muslim population in Xinjiang, China (known as the Xinjiang Uyghur Autonomous Region (XUAR)). He also confirmed an extension of a UK modern slavery legislation to introduce fines for businesses that do not comply with their transparency obligations. The Foreign Secretary’s statement follows two UK Parliamentary Enquiries which have looked at supply chain issues particularly involving well-known brands and retailers.
What did the Foreign Secretary say?
The Foreign Secretary talked at some length about the political avenues that he was exploring both directly with China and through the UN. He said however that in addition to political avenues, he was exploring a number of ways of making companies more responsible. He said:
“Xinjiang’s position in the international supply chain network means that there is a real risk of businesses and public bodies around the world – whether it’s inadvertently or otherwise – sourcing from suppliers which are complicit in the use of forced labour. Allowing those responsible for these violations to profit, or indeed making a profit themselves by supplying the authorities in Xinjiang.”
The Foreign Secretary announced that planned UK Government action would include:
- Encouraging businesses to conduct “appropriate due diligence”.
- Strengthening the operation of the Modern Slavery Act 2015, including fines. He gave no exact timescale on those changes to the Act but said that it would happen “as soon as Parliamentary time allows”.
- Extending the transparency requirements of the Modern Slavery Act 2015 to the public sector. The UK Government will give guidance to UK Government bodies to exclude suppliers where there is sufficient evidence of human rights violations in any of their supply chains. The Foreign Secretary said “any company profiting from forced labour will be barred from government procurement in this country”.
- The Government will conduct an “urgent review” of export controls.
The announcements regarding amendments to the Modern Slavery Act 2015 come after a Government consultation closed last year. We wrote about that here https://www.corderycompliance.com/uk-govt-modern-slavery-consultation-conclusions/.
The Foreign Secretary said that he was also working with Australia, Canada, the US, France, Germany and New Zealand to look at possible ways of coordinating efforts.
What has Parliament been considering?
The issues of forced labour in China have been on the agenda of the UK Parliament’s Business, Energy and Industrial Strategy (BEIS) Committee since it launched an investigation with a call for written submissions on 18 September 2020. This was followed up with a Parliamentary hearing on 5 November 2020 where the Committee heard evidence from Government, companies and a broadcaster and campaigner on some of the issues. We understand that the BEIS Committee is currently preparing a report with additional recommendations to Government.
It is likely that the BEIS Committee’s recommendations will include an acceleration of the changes in UK modern slavery law which we wrote about in September 2020 (see here https://www.corderycompliance.com/uk-govt-modern-slavery-consultation-conclusions/) but a number of other measures have been discussed including:
- Encouraging use of the Foreign Prison-Made Goods Act 1897 to put border checks in place post-Brexit – in some respects to match similar legislation in the US.
- Legislation obliging brand owners, retailers etc. look at all 4 tiers of supply.
- Reversing the burden of proof with China-made goods.
- Making it easier for class actions to be brought – there’s already a threatened class action relating to allegedly XUAR-made products.
- Disqualification proceedings for corporate officers who cannot give supply chain assurance. There’s been a focus on corporate governance in Parliament’s investigations into BooHoo too.
- Magnitsky Act style sanctions on companies with XUAR connections including financial services providers.
In our view some of these proposals have more chances of success that others but there does seem to be cross-party support in the UK Parliament for some changes to be made.
What does this mean?
It is clear that supply chain compliance is high on the UK Government’s agenda. The appetite to update the modern slavery compliance disclosure and transparency requirements is clearly there, but, legislative changes may take time to actually come about given other pressures on Parliamentary time. Having said that the BEIS committee hearing did seem to show cross-Parliamentary support for change which might make it quicker for new legislation.
Some of the other proposed measures won’t require new law although our research suggests that the Foreign Prison-Made Goods Act 1897 has not been enforced throughout its 113 year history. Litigation can’t be ruled out and complaints could also be made under existing legislation where for example importers have not been honest about the origin of goods coming into the UK. This could cause issues for companies particularly since our experience is that some of the data submitted to the BEIS committee was not accurate. Companies will need to do all that they can to have appropriate visibility in their supply chain as a result.
Its important to remember that the UK, unlike most other jurisdictions does already have modern slavery laws in place. As a result, organisations shouldn’t let down their guard on modern slavery compliance, in particular because of the compliance risks concerning the current pandemic. Modern slavery compliance should still be on the agenda of the Board and training should still be carried out – crucially, employees and suppliers need to know how to spot the signs that modern slavery may be taking place. We’ve made a short film about that which you can see on our YouTube channel here http://www.corderycompliance.com/spotting-the-signs-of-modern-slavery/.
For more information on Cordery’s work on modern slavery and a short film explaining the law click here https://www.corderycompliance.com/modernslavery/. Cordery’s Modern Slavery Action helps organisations meet their modern slavery reporting requirements for a fixed fee. There are more details here https://www.corderycompliance.com/solutions/modern-slavery-action/.
For more information please contact André Bywater or Jonathan Armstrong who are lawyers with Cordery in London where their focus is on compliance issues.
|Jonathan Armstrong, Cordery, Lexis House, 30 Farringdon Street, London, EC4A 4HH||André Bywater, Cordery, Lexis House, 30 Farringdon Street, London, EC4A 4HH|
|Office: +44 (0)207 075 1784||Office: +44 (0)207 075 1785|
Image courtesy of https://www.dfsworldwide.com/Shipping-to-China.html