Esquel Group, one of the world's biggest shirtmakers, won a rare victory in its effort to get one of its subsidiaries removed from a United States government blacklist over allegations of ties to forced labour in western China.
The End-User Review Committee, a US inter-agency body, voted to remove its Changji Esquel unit under certain conditions from the so-called entity list, which prohibits it from buying from American suppliers, according to a joint motion filed on Tuesday in US District Court for the District of Columbia.
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 federal court last month over Changji Esquel's inclusion on the entity list.
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"The parties are currently engaging in further discussions regarding those conditions," the motion said.
In the motion, the parties asked the court to delay the next hearing scheduled in the case until September while the discussions continue. The litigation is ongoing.
The Changji Esquel 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".
An Esquel representative declined to comment on Wednesday on the nature of the conditions set by the committee. The Bureau of Industry and Security, which oversees the entity list, did not respond to a request for comment.
In its lawsuit, Esquel, which has had a presence in Xinjiang for a quarter of a century, said it has tried to engage with the US government to correct the record, but had received no meaningful response or evidence to support the inclusion of its Xinjiang unit.
The US Commerce Department has previously declined to comment on the lawsuit.
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.
Additional reporting by Owen Churchill