CECC Hearing on Social Audits

April 30, 2024

Representative Chris Smith (R-NJ) and Senator Jeff Merkley (D-OR), co-chairs of the Congressional-Executive Commission on China (CECC), convened a hearing on April 30, 2024: “Factories and Fraud in the PRC: How Human Rights Violations Make Reliable Audits Impossible.”

At the hearing, Thea Lee, Deputy Undersecretary for International Affairs at the U.S. Department of Labor, Scott Nova, Executive Director of the Worker Rights Consortium, Jim Wormington, Senior Researcher and Advocate on Corporate Accountability at Human Rights Watch, and Adrian Zenz, Senior Fellow and Director in China Studies at the Victims of Communism Memorial Foundation testified about the failure of social audits to identify state-imposed forced labour in global supply chains.

“To date, many corporations seem to be relying on these social audits to shield themselves from potential liability – social audits which today’s hearing, along with the good work which has been done by several of our witnesses, will be shown to be works of near fiction when it comes to accurately portraying the state of labour in the People’s Republic of China.” – Representative Christopher Smith, CECC Chair

“This is the core question for today’s hearing: are the audits that importers must cite to meet the law’s standard reliable, do they have integrity, or are they even genuine? Are reliable audits even possible in an environment where the Chinese government does not allow workers to speak freely, harasses auditors conducting due diligence in Xinjiang, and prevents auditors from obtaining information needed for their job?” –  Senator Jeff Merkley, CECC Co-Chair

“The problem, as we will hear today, is that even when these audits conform with industry-wide ESG standards, they may not be reliable in the Chinese context. This is both because the companies themselves pay for the audits and have a financial stake in clean findings, and because the PRC, instead of correcting course and ending the use of forced labour, has chosen to retaliate against those who do the audits or cooperate with them.” – Representative James P. McGovern, CECC Commissioner

“It is clear that effective worker voice is impossible when workers are trapped in state-sponsored forced labour, where there are no independent, democratic unions, and where workers continue to face threats and reprisals. This is the situation we face in China. There are widespread restrictions and repression of freedom for human rights defenders. There is not just a lack of civil society presence; rather, the entire civic space has been shut down. In Xinjiang in particular, ethnic minorities live in fear of the Chinese government. Any audit occurring in Xinjiang cannot be conducted without government oversight, making objective worker interviews free from reprisal an impossibility.” – Thea Lee, U.S. Department of Labor International Affairs

“Social auditing is poorly suited to uncovering abuses even in environments conducive to labour rights investigation; an unconducive environment, like the one in China, makes this mismatch extreme. This raises a vital question: how can U.S. corporations importing from China carry out the due diligence with respect to forced labour they now have a legal obligation to perform? The answer with respect to auditing in the XUAR: they cannot. Firms cannot rely on factory audits to ensure that their supply chains are free of forced labour. Meaningful audits remain a practical impossibility in the region which is why no sourcing can be allowed.” – Scott Nova, Worker Rights Consortium

“The impossibility of conducting credible audits in the Uyghur Region, the growing concerns about the obstacles to effective auditing in the rest of China means that companies should not rely on audits, either as the evidence of forced labour at specific factories or as proof that a supplier in China is sourcing responsibly and does not have forced labour in its supply chain. Companies should instead themselves map their supply chains and responsibly disengage from joint ventures, subsidiaries, or suppliers who continue to operate in or source materials or products from the Uyghur Region.” – Jim Wormington, Human Rights Watch

“State-imposed forced labour operates through a pervasive police state environment. It is therefore more readily assessed as a risk than a specific instance because it creates an environment where victims cannot speak freely. As a result, due diligence efforts based on social or labour audits are not feasible, neither in Xinjiang nor in other Chinese provinces that receive transferred ethnic workers.” – Adrian Zenz, Victims of Communism Memorial Foundation

The CECC’s press release following the hearing is available here. Written testimonies of the speakers are available here.