A Congressional investigation found that BMW, Jaguar Land Rover and Volkswagen bought parts from a Chinese supplier that had been flagged by the US for participating in a forced labor program in China’s far western Xinjiang region. . detention.
Report says both BMW and Jaguar Land Rover continued to import parts manufactured by Chinese companies into the United States in violation of U.S. law, even after being informed in writing of the presence of prohibited products in their supply chains. He continued to do so.
BMW shipped at least 8,000 MINI cars equipped with the parts to the United States after the Chinese supplier was added to the U.S. government’s list of companies participating in forced labor in December. Volkswagen has taken steps to resolve the issue.
The investigation, launched in 2022 by Senate Finance Committee Chairman Ron Wyden (D-Ore.), will investigate whether the U.S. has passed a two-year-old law aimed at blocking imports of goods from Xinjiang. It highlights the risks faced by major automakers as they move toward enforcement. . The Uyghur Forced Labor Prevention Act prohibits the importation of goods made in whole or in part in Xinjiang into the United States unless the importer can prove that the products were not made with forced labor.
“Automakers are silently asserting that forced labor does not exist in their supply chains,” Wyden said in a statement.
“Somehow, the Treasury Board’s oversight staff revealed what multibillion-dollar companies failed to reveal: BMW’s imported cars, Jaguar Land Rover’s imported parts, and VW AG’s manufactured “The cars contained parts manufactured by a supplier that was banned due to forced labor of Uyghurs,” he added. “Automobile manufacturers’ self-regulation is clearly not working.”
The part in question is known as a LAN transformer and is part of the system that allows the vehicle’s electronic components to communicate with each other. The automaker did not buy parts directly from Sichuan Jingweida Technology Group (also known as JWD), a Chinese manufacturer that is accused of using forced labor. Rather, it was part of an electronics unit purchased from Lear, a supplier of automotive electrical systems.
Lear said in a statement that it had no direct relationship with JWD and purchased the parts through another supplier. When Lear learned that JWD had been added to the forced labor list, the company said: “We immediately notified our customers of products containing these parts and worked with our suppliers to quickly subcontract the production of these parts to another sub-supplier.”
It added: “We take these matters seriously and share the Commission’s desire to combat forced labor.”
The Chinese government has implemented programs to put people in Xinjiang to work in private companies and farms, but human rights experts say some of these arrangements are forced. Reports published in recent years by researchers at the Australian Strategic Policy Institute and Sheffield Hallam University have found that JWD is involved in government-backed labor transfer programs, including transferring hundreds of Xinjiang residents to the company in 2018. was believed to be involved. In December, the US government added: JWD published a list of companies that worked with the Xinjiang government to recruit, transport, and host forced labor.
In January, Lear notified three automakers that it had sold JWD parts. Volkswagen subsequently voluntarily disclosed to U.S. customs officials that vehicles being transported to the United States contained the part. The company arranged for the parts to be replaced at a U.S. port before entering the United States.
But the commission said that even after receiving Lear’s letter, BMW continued to import the part and thousands of MINI cars equipped with it until at least April 2024. According to the report, BMW appears to have halted imports only after the commission repeatedly asked questions about JWD.
BMW said in a statement that it has taken steps to suspend imports of the parts and will voluntarily replace parts in vehicles containing these parts. “The BMW Group has strict standards and policies regarding employment practices, human rights and working conditions, which all direct suppliers must comply with,” the company said.
Jaguar Land Rover also received a letter from Mr. Lear in January, but told the committee its North American subsidiary was not informed about the matter, according to the report. The company continued to import JWD parts until shortly after April 22, when Mr Lear relayed the information to Jaguar Land Rover.
Volkswagen also continues to maintain facilities in Xinjiang through a joint venture with a Chinese state-owned company. Volkswagen told the committee that an outside company audited its facilities and found no forced labor in 2023, but declined to provide Congress with the full version of the audit.
Jaguar Land Rover and Volkswagen did not respond to requests for comment.
China denies the existence of forced labor and human rights violations in Xinjiang. From 2017 to 2019, Chinese authorities in Xinjiang detained more than 1 million Uyghurs and other ethnic minorities in re-education centers, according to the U.S. government.
High rates of incarceration and various forms of political indoctrination continue today, according to a Congressional Research Service report. The New York Times also documented China’s mass detention plans in Xinjiang.
China is the world’s largest automobile market and the fastest growing. The country accounted for about a third of the cars sold by BMW and Volkswagen in the first quarter, and about a fifth of Jaguar Land Rover’s sales.
But foreign automakers are struggling to maintain market share amid the onslaught of new Chinese competitors focused on electric vehicles. And it is becoming increasingly difficult for foreign automakers to maintain good relations with the Chinese government while adhering to U.S. and European human rights standards.
A car has tens of thousands of components, and JWD parts sit deep in the supply chains of these major automakers. Still, the Senate committee said the incident highlights the inadequacies of current systems used to identify forced labor, including surveys, self-reporting and limited audits of direct suppliers. Stated.
Richard Mojica, a customs attorney at Miller & Chevalier, said automakers face a “huge” challenge trying to track their entire supply chain, in part because they don’t track their direct suppliers. He said it relies heavily on cooperation and that doesn’t always happen.
The United States “still does not impound enough cars and car parts,” he said. But increased government enforcement may force automakers and their suppliers to plan for these supply networks more urgently.
Companies that buy cotton, tomatoes, solar panels, critical minerals, and other goods from China are also grappling with exposure to Xinjiang in their supply chains.
Last Thursday, the Biden administration added 26 Chinese textile companies to the Uyghur Forced Labor Prevention Act’s list of entities due to their ties to forced labor. Wyden said he will call on U.S. Customs to step up enforcement and crack down on violators.
