Hong Kong-based Esquel Group, one of the world’s biggest shirtmakers, said it had resumed litigation to remove its Xinjiang unit from an American blacklist after it failed to reach an agreement with the US Commerce Department on what conditions it could be removed.
Earlier this month, Esquel won a rare victory over a US blacklisting when the End-User Review Committee, a US inter-agency body, voted to remove its Changji Esquel unit under certain conditions from the so-called entity list, which prohibits it from buying from American suppliers.
“Despite good-faith efforts since early August, Esquel Group and the US Department of Commerce have not been able to come to a resolution, as the US government is unable to provide any concrete timeline by which it could finally remove [Changji Esquel] from the entity list,” Esquel said in a statement. “In the meantime, Esquel has suffered substantial, ongoing, and irreparable harms that have continued and even worsened in the last month.”
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Esquel said US Customs and Border Protection had held and excluded from entry “a large number of shipments” from its factories outside China in the past month, potentially forcing it to miss commitments to customers and causing “permanent economic and reputational damages”.
“This heightens the need for emergency relief,” Esquel said.
The Hong Kong textile company, which counted Nike, Patagonia and Tommy Hilfiger as customers before the blacklisting, sued the Commerce Department and other US government agencies and officials in federal court in July over Changji Esquel’s inclusion in the entity list.
It is seeking a new hearing date in the US District Court for the District of Columbia on its request for a preliminary injunction in the matter.
In a declaration to the court, Marjorie Yang Mun-tak, Esquel’s chairman, said several Esquel customers, including two large and established US brands, have had about US$1.6 million in shipments from Vietnam detained, or flagged for intensive examinations, by US customs officials despite not containing any cotton fibres or yarn from Xinjiang or China.
One customer had paused all production and shipments from Esquel with immediate effect, affecting orders worth more than US$2.5 million, Yang said. Another US$6 million worth of goods en route from Vietnam and Sri Lanka were at “high risk of being detained”, she said.
“Under these circumstances, I believe that [Customs and Border Protection] CBP has added most if not all Esquel factories to its targeting criteria, which essentially results in automatic detention of a large amount of Esquel shipments to US importers,” Yang said. “I further believe that CBP has done so based on [Changji Esquel’s] status on the entity list.”
The subsidiary, which is based in China’s Xinjiang Uygur autonomous region, was added to the entity list just a year ago, as the US sought to punish companies over alleged human rights abuses against Uygur Muslims in the region. Esquel has repeatedly denied the allegations and said its unit was improperly added to the entity list with “no notice or supporting evidence”.
Esquel, which has had a presence in Xinjiang for a quarter of a century, said it has tried to engage with the US government to correct the record, but had previously received no meaningful response or evidence to support the inclusion of its Xinjiang unit.
The US Commerce Department has previously declined to comment on the lawsuit and the Bureau of Industry and Security, which oversees the entity list, did not respond to a request for comment outside normal business hours in Washington.
The Changji Esquel unit was one of 11 Chinese companies sanctioned by the Commerce Department last year for alleged ties to forced labour in Xinjiang. The US blacklisted another 14 Chinese companies over their role in suspected human rights abuses in Xinjiang on July 9.
The US government, as well as human rights groups and a United Nations committee, claim that as many as 1 million Uygur Muslims, Xinjiang’s largest ethnic group, have been detained in “re-education centres” and subjected to indoctrination, torture and forced labour. The region produces about 85 per cent of China’s cotton and about a fifth of the global cotton supply.
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