Volkswagen Uyghur Customs Jam

Volkswagen said Tuesday that  U.S. Customs had detained several thousand Bentley, Porsche and Audi vehicles at ports because the cars contained a part made by a Chinese supplier on a sanctions list for using forced labor in Xinjiang. VW said it had notified authorities after learning from a supplier that its products included parts made by the banned company. 

The automaker describes the part's origin as a "sub-supplier," meaning a supplier to one of its suppliers—an entity far down the supply chain.  “One tiny part,” a VW spokesman told the Wall Street Journal, adding that it was in the process of refitting the vehicles and delivering them to dealers. “We really try, but this shows how challenging it is to really know everything that is happening in complex supply chains.”

The disclosure may reflect the firm’s previous commitment  to conduct an audit of its Chinese operations for exposure to modern slavery.  "We are absolutely holding onto our intent [to run the audit]," VW said in response to an open letter sent by the Association of Ethical Shareholders Germany to the carmaker on the topic earlier in July.

On Feb. 21, Reps. Mike Gallagher (R-WI) and Raja Krishnamoorthi (D-CA) penned a letter to VW CEO Oliver Blume citing their "deep concern" about the forced labor content, according to reporting by Reuters.

Aluminum is Tainted Content

Almost a tenth of the world’s aluminum, a key material for car manufacturing, is produced in the Xinjiang Uyghur Autonomous Region, and  most companies have done little to map their supply chains for aluminum parts and identify and address potential links to Xinjiang, according to a recent report by Human Rights Watch.

Xinjiang’s aluminum production has grown from approximately one million tons in 2010 to six million in 2022. More than 15 percent of the aluminum produced in China, or 9 percent of global supply, now comes from the region. Xinjiang produces more aluminum than any country outside of China.

The report cites “credible evidence” that aluminum producers in Xinjiang are participating in forced labor transfers. Most of the aluminum produced in the XUAR is transported to other provinces in China as “unalloyed” ingots, blocks of unprocessed aluminum metal that can later be remelted to make a desired alloy, rendering origin tracing efforts ineffective.

Tianshan Aluminum  closely linked to sanctioned Xinjiang Production and Construction Corps (XPCC), has sold aluminum to international traders Glencore and Trafigura.

Glencore told Human Rights Watch in January 2024 that “we purchase aluminum from the Tianshan smelter in the Xinjiang province, which is sold to Chinese domestic customers.” The company also stated that, “we recognize the risks of forced labor associated with Xinjiang,” and said it had conducted due diligence over the Tianshan smelter and that “further enhanced due diligence will be conducted in 2024.” Trafigura did not respond to questions from Human Rights Watch.

Carmakers both inside and outside China sourcing parts containing aluminum produced in China are likely sourcing aluminum that originated in Xinjiang. 

Auto Industry Exposure

In July 2023, Human Rights Watch wrote to BYD (China), General Motors (US), Tesla (US), Toyota (Japan), and Volkswagen (Germany) to obtain information about their efforts to map their aluminum supply chains and eliminate exposure to forced labor in Xinjiang. Volkswagen met with Human Rights Watch to discuss the report and subsequently provided on-the-record responses to questions discussed in that meeting. General Motors and Tesla provided written responses to Human Rights Watch. Toyota and BYD did not respond.

Volkswagen and other carmakers have argued that they have limited control over their joint ventures’ operations and supply chains. Volkswagen told Human Rights Watch that the company is not legally responsible under Germany’s supply chain law for human rights impacts in their Chinese joint ventures’ supply chain because the law only covers subsidiaries in which companies have “decisive influence.

When asked what steps it takes to ensure SAIC-Volkswagen is not purchasing aluminum from a producer linked to Xinjiang, Volkswagen stated: “We have no transparency about the supplier relationships of the non-controlled shareholding SAIC-Volkswagen. We therefore ask for your understanding that we do not make any statements about this question.”

The company told Human Rights Watch that, while it has prioritized supply chain mapping for certain aluminum parts, it still has “blind spots” over the origin of the aluminum in its cars. The company also said that supply chain mapping for aluminum is a challenge because of the sheer number of aluminum suppliers and the number of intermediaries in the supply chain.

The Aluminum Stewardship Initiative (ASI) is an audit program that assesses direct and indirect suppliers against social and environmental standards, including their responses to forced labor. ASI has not certified smelters in Xinjiang, telling investigators “reference to ‘Uyghur forced labor’ was likely not incorporated in the audit report due to political sensitivities in China on this specific issue.”