US' Uyghur Forced Labor Prevention Act (UFLPA) Is Hurting Retail Supply Chains From China

The garment industry is facing a significant challenge due to its heavy reliance on China for materials, especially as the United States intensifies efforts to combat forced labor in the Xinjiang province.

The Uyghur Forced Labor Prevention Act (UFLPA), in effect since June 2022, has led to the seizure of nearly 1,000 clothing and footwear shipments destined for the US by customs, with less than 300 released as of mid-October.

Under the UFLPA, goods linked to Xinjiang, a major cotton-producing region, are assumed to involve forced labor and are prohibited in the US unless there is "clear and convincing evidence" proving otherwise.

This poses a significant challenge for brands as China plays a dominant role in fabric production, impacting the entire supply chain, as reported by Asia Nikkei.

Xinjiang produces around 86 per cent of China's cotton, accounting for approximately 20 per cent of the world's cotton supply.

Despite efforts to clear inventories, concerns linger about the economic outlook in the US.

The value of US garment imports decreased by 22 per cent in the year to August, with China still accounting for 41 per cent by quantity, followed by Vietnam, Bangladesh, and Cambodia.

UFLPA has affected cotton apparel shipments, which now constitute only 26 per cent of US apparel imports from China in August 2023, down from 40 per cent in 2018.

As part of broader US trade actions against China, the UFLPA has prompted brands and factories to explore new sourcing and manufacturing options. While other Asian rivals have absorbed some demand, countries like Bangladesh, Vietnam, and Cambodia still heavily rely on China for raw textile imports.

As the industry shifts towards sustainability, concerns arise about the impact of UFLPA on recycled cotton. Identifying the sources of recycled cotton becomes challenging, posing additional hurdles for retailers emphasizing sustainability.