Tesla, VW at Risk of Ties to Uyghur Forced Labor in China

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(Bloomberg) — Five of the world’s major carmakers aren’t sufficiently mapping their supply chains to stamp out links to forced labor programs in China’s Xinjiang region, according to a report by Human Rights Watch.

The area in China’s northwest is an important aluminum producer, accounting for about 9% of global supply, and the industry has ties to state-sponsored labor transfer programs that have been accused of coercing Uyghurs and other Muslim minorities into jobs, it said.

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That’s left legacy automakers Toyota Motor Corp., General Motors Co. and Volkswagen AG, as well as electric-vehicle producers Tesla Inc. and China’s BYD Co., at increased risk of exposure to forced labor, HRW said. The sector’s reliance on coal to power aluminum smelters adds to the risks. 

The problem is compounded by the threat of government reprisals against companies that investigate links to Xinjiang and joint-venture relationships between foreign and Chinese firms that limit carmakers’ efforts to trace the supply chain, they said. The US-headquartered group based its findings on Chinese state media articles, company reports, and government statements.

Read More: Forced Labor Dispute Is Completely Redefining US-China Relations

China says its rural labor programs lift residents out of poverty, but the US and others say the system is coercive, with many Uyghurs too afraid to say no to a government that has separately been accused of incarcerating more than a million of them in recent years. The dispute has embroiled industries as varied as solar panels to cotton and tomatoes, upended trade flows and seen industry giants like Nike Inc. caught in the fallout.

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Aluminum has faced scrutiny before, but the complexity of the supply chain — the metal is bought and sold by commodity traders and processed into alloys — makes it easy to obscure a product’s origins. China has repeatedly denied forced labor allegations, calling earlier research into automakers’ ties to Xinjiang “ill-intentioned smears”.

BYD and Tesla didn’t respond to requests for comments from Bloomberg News on the HRW report. Toyota said it will closely review the report and the company expects suppliers to not infringe upon human rights. A representative for GM in China didn’t immediately respond to a request for comment.

VW said in a statement it adheres to the UN Guiding Principles on Business and Human Rights and takes a stand against forced labor. Suppliers in China that the company commissions directly are in the scope of its sustainable procurement measures. Allegations are investigated by the firm and violations, including forced labor, can lead to termination of the contract with the supplier if no remedial action is taken.

China’s Ministry of Industry and Information Technology didn’t immediately respond to a fax seeking comment on the report.

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Read More: China Calls Charges Carmakers Have Ties to Forced Labor ‘Smears’

Lack of Transparency

Pinning down the scale of China’s use of forced Uyghur labor is difficult as the government allows limited, if any, access to investigators looking into allegations of human rights abuses. 

Between 2014 and 2019 about 2.76 million rural laborers per year were relocated in Xinjiang, mostly from the region’s south where the majority of Uyghurs reside, HRW said, citing a Xinhua report. But the figure may include transfers of Han Chinese, the country’s ethnic majority, and count multiple relocations of the same person within a year. There were 3.2 million transfers in 2021, the report said.

Most carmakers have policies in place to eliminate forced labor and require their suppliers to address such risks, but HRW said firms lack the necessary knowledge of their aluminum supply chains. 

In response to HRW, Tesla said in several cases it had mapped its supply chain back to mines and didn’t find evidence of forced labor. But the company didn’t provide details on what proportion of its aluminum supply it has traced to the smelter level or reveal the origins of the supply, the report said.

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Read More: VW, Mercedes and BMW Cross Their Fingers as China Risk Escalates

VW said it had prioritized certain aluminum parts as it has tens of thousands of suppliers, making full supply-chain transparency hugely challenging, according to the report. Its responsible sourcing measures don’t cover its non-controlled Chinese joint ventures, it said.

Toyota and BYD didn’t respond to questions from Human Rights Watch. GM told the group it was continuously working with partners to address potential forced-labor risks in the supply chain, but didn’t detail how it provides oversight of sourcing by Chinese joint ventures, the report said.

Governments including the the UK, Australia and Canada should enact laws to ban imports linked to forced labor and require companies to disclose their supply chains for commodities with a high-risk of links to human rights abuses, HRW said. 

In the US, which already targets Xinjiang products, the Forced Labor Enforcement Task Force should make aluminum a “high-priority sector” under the Uyghur Forced Labor Prevention Act and the country should require listed companies to file reports annually stating they don’t source high-risk commodities from Xinjiang, it said.

“Car companies simply don’t know the extent of their links to forced labor in Xinjiang in their aluminum supply chains,” said Jim Wormington, senior researcher and advocate for corporate accountability at Human Rights Watch. “Consumers should know their cars might contain materials linked to forced labor or other abuses.”

Read More: US Detains Chinese Aluminum Suspected of Forced-Labor Origin

—With assistance from Nicholas Takahashi, Chunying Zhang, Dana Hull and Winnie Zhu.

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