Forced labour in UK value chains

Given that evidence of serious human rights abuses in Xinjiang has been widely reported over many years, we are appalled that companies still cannot guarantee that their supply chains are free from forced labour. We found that many companies asserted that they have robust procedures for prohibiting human rights abuses while failing to undertake the necessary and basic due diligence procedures to know for certain that their supply chains are not implicated in slave labour or the abuse of minorities in China

It is clearly unacceptable that Boohoo was found to have only minimal data about the different tiers in their supply chain, resulting in labour abuses in the UK. Boohoo and other companies need to accurately audit their supply chains both in the UK and around the world. We welcome Boohoo’s decision to appoint Sir Brian Leveson to review the company’s supply chain transparency in response to our inquiry. We would encourage other companies to undertake independent inquiries into their due diligence policies.

We welcome TikTok’s offer to review its algorithm, and we will visit their offices to do so with an expert team as soon as is possible. Meanwhile, we remain deeply concerned about the flow of information between TikTok UK, its parent company ByteDance Ltd and other subsidiary companies (such as ByteDance (HK) Ltd), which are subject to China’s National Intelligence Law. We invite TikTok to publish independently verified governance and data flow arrangements to confirm full legal separation between TikTok UK and other ByteDance Ltd group companies.

We are deeply disappointed that The Walt Disney Company declined our invitation to give oral evidence, and to engage meaningfully with our inquiry. The Walt Disney Company has a responsibility to demonstrate that none of their actions supported oppression or undermined human rights during the production of Mulan. The Walt Disney Company still has many questions to answer, particularly in relation to concerns about whether it completed adequate risk assessments and put in place sufficient safeguarding measures during the production of Mulan in Xinjiang, and why it refused to answer questions before our Committee. Correspondence continues between the Committee and The Walt Disney Company. (Paragraph 33) UK Government action- the next steps

We believe the Department must do more to meet its commitments to uphold human rights, particularly in relation to businesses with links to China. While transparency of supply chain legislation falls under the remit of the Home Office, business transactions are a BEIS responsibility. Despite mounting evidence, the Department has shown little sign that it is taking a proactive or meaningful lead on investigating UK business links to forced labour and other human rights abuses in China or elsewhere. The Department must take urgent action in order to eradicate the use of forced labour in UK value chains, as set out below. (Paragraph 41) 24 Uyghur forced labour in Xinjiang and UK value chains Company Directors Disqualification Act 1986

We recommend that the Department reviews the Company Directors Disqualification Act (1986) to determine whether breaches of the Modern Slavery Act 2015 obligations on companies and directors should be the basis for future disqualification for company registration or director duties. (Paragraph 43) A new BEIS policy framework?

The Government cannot stand idly by while some companies keep operating with wilful blindness. We recommend the creation of a Director-led working group within the Department to tackle the ongoing lack of transparency in supply chains specifically linked to the use of forced labour of, but not limited to, Uyghurs in Xinjiang. The working group should coordinate action across Government in relation to the enforcement and strengthening of business compliance with relevant legislation, UN diplomacy, Magnitsky sanctions and human rights declarations.

In addition, we call on the Government to report to the Committee on the feasibility and legal basis of further measures in respect of supply chains linked to Xinjiang, including i) a whitelist of companies that have taken significant and clearly evidenced actions regarding their supply chain links to Xinjiang, and ii) a blacklist of firms that have failed to provide evidence that they do not have supply chain links to Xinjiang or refuse to answer questions about possible links. These lists should also include companies that secure contracts from the UK Government, and an updated version should be published every six months. Companies that are operating in Xinjiang must prove that they are not in breach of the Modern Slavery Act 2015.

The Transparency in Supply Chains legislation in the Modern Slavery Act was important when it was first introduced, but it has not kept pace with changes in business supply chains. The Modern Slavery Act is out of date, has no teeth, and we do not accept that businesses should be excused from doing basic due diligence to guarantee that their supply chains are fully transparent and free from forced labour and slavery.

The Department’s commitment to working with other ministries to strengthen the Modern Slavery Act and Transparency in Supply Chain legislation is welcome. However, there is little evidence that BEIS-specific issues around corporate governance and audit regulations are being given sufficient prominence in these cross-departmental discussions in Government.

We are disappointed by the Government’s refusal to commit to a clear timetable for making changes to the Modern Slavery Act. We recommend that the Government strengthen the supply chain transparency obligations for companies and introduce tough fines for non-compliance in line with other price/ earnings to growth responsibilities for companies.

We further recommend that the Government a) accelerate its plans to extend the reporting requirement to public bodies, b) enhance the transparency and accessibility of modern slavery statements, and c) develop options for civil penalties for non-compliance. We ask the Government to bring forward concrete plans for the Uyghur forced labour in Xinjiang and UK value chains 25 implementation of these proposals as a matter of priority. These proposals should include a commitment to creating a publicly accessible digital depository on the Government’s website containing annual modern slavery statements. (Paragraph 60) Magnitsky sanctions and international cooperation

We are disappointed that Magnitsky sanctions have not yet been imposed on Chinese officials implicated in human rights abuses in Xinjiang. Given that the US Government has imposed such targeted sanctions, we do not accept the argument that the UK Government has insufficient evidence to impose new sanctions. We are also disappointed that the BEIS Department has failed to take a lead on determining the efficacy of sanctions against perpetrators of human rights abuses in Xinjiang.

We recommend that the Department, in collaboration with the FCDO and DIT, fully assess the options for introducing targeted sanctions against Chinese and international businesses implicated in human rights abuses and the exploitation of Uyghurs in Xinjiang. (Paragraph 68) BEIS Official Development Assistance spending in China

We were disappointed that the information provided by the Minister about the deployment of BEIS Department ODA funding in China only gave a high-level overview of the various research and training programmes taking place in China under the umbrella of BEIS ODA. This is important because it does not guarantee effective oversight of the use of BEIS funding in China.

We recommend that the Department commit to full transparency in terms of its ODA funding being used in China to ensure that no Government funds are being used to underpin human rights abuses. The use of taxpayer funds needs to be addressed. The Department should conduct an urgent review of its direct expenditure, including those via other UK Government departments - in particular the DIT and FCDO - or public bodies in China, to ensure it is compliant with the principles expressed in this report.

The Department should also publish a comprehensive supply chain review of Newton Fund-supported projects in China and provide the Committee with a full list of the organisations it works with in administering the Newton Fund and the sums of money involved. (Paragraph 75) 26 Uyghur forced labour in Xinjiang and UK value chains