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Hong Kong's Esquel Group Seeks Preliminary Injunction Over US Blacklisting Of Xinjiang Unit

Esquel sued the US Commerce Department this month to force the removal of its Xinjiang unit from the US's so-called entity list Changji Esquel unit one of more than two dozen companies sanctioned for alleged ties to forced labour

Hong Kong's Esquel Group Seeks Preliminary Injunction Over US Blacklisting Of Xinjiang Unit

Esquel Group, one of the world's biggest shirt makers, has asked an American court to grant a preliminary injunction removing one of its subsidiaries from a United States government blacklist over allegations of ties to forced labour in western China.

The Hong Kong textile company, which counted Nike, Patagonia and Tommy Hilfiger as customers before the blacklisting, sued the US Commerce Department and other US government agencies and officials in US District Court for the District of Columbia this month over the inclusion of its Changji Esquel unit on the so-called entity list, which prohibits it from buying from American suppliers.

The unit, which is based in China's Xinjiang Uygur autonomous region, was added to the entity list 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".

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"Esquel has had no choice but to take legal action to end the devastating ongoing reputational and commercial damage resulting from this erroneous designation," the company said in a statement on Tuesday.

Last year, a US government inter-agency committee determined that Changji Esquel had engaged in activities "contrary to the foreign policy interests of the United States through the practice of forced labour involving members of Muslim minority groups" in Xinjiang. Changji Esquel was added to the blacklist in July 2020.

Esquel, which has had a presence in Xinjiang for a quarter century, said it has tried to engage with the US government to correct the record, but has received no meaningful response or evidence to support the inclusion of its Xinjiang unit.

The US Commerce Department previously declined comment on the lawsuit and has not yet filed a reply to the litigation.

Founded in 1978, family-owned Esquel previously produced more than 100 million shirts for global fashion brands a year and employed more than 40,000 people globally. The Hong Kong company said all of its factories adhere to fair labour and human rights practices, including a ban on compulsory or forced labour conditions.

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 Xinjiang region produces about 85 per cent of China's cotton and about a fifth of the global cotton supply.

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 US has labelled Beijing's policies in the region as "genocide" and, alongside the European Union, the United Kingdom and Canada, have sanctioned Chinese officials over the suspected human rights abuses.

Last week, the US State Department, alongside the Treasury Department, the Commerce Department and other cabinet-level agencies, issued an updated warning to American businesses and other companies that they could face a "high risk of violating US law" if they do not cut ties to Xinjiang.

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