August 30, 2021

Apparel company fights Commerce Department slave labor listing

On August 27, 2021, three entities in the Esquel group filed a motion to reopen their litigation against the US Department of Commerce.  Esquel is, in its own words, “an independent family-owned textile and apparel manufacturing business based in Hong Kong.”  The group sued the Department of Commerce in the US District Court for the District of Colombia on July 6, 2021, claiming that the Commerce Department’s Bureau of Industry and Security under the Trump administration had erroneously placed an Esquel subsidiary, Changji Esquel Textile Co. Ltd, on the US Entity List in July 2020, based on its alleged use of forced labor in the Xinjiang region of China.  Once placed on the Entity List, a company is subject to specific licensing requirements for the export, re-export or transfer of specified items.

In its complaint, Esquel asserted that the allegations that it engages in forced labor practices in Xinjiang or elsewhere are false, that it was given no notice of the administration’s intention to place Changji Esquel on the Entity List, and that the company has a “thoroughly documented, independently audited and longstanding track record of adherence to ethical labor practices.” The company further asserts that it has been deeply stigmatized by the listing, and has suffered devastating economic consequences from being labeled an unethical company associated with forced labor.  According to Esquel’s amended complaint, it has had to close its factories in Mauritius and reduce operations in Sri Lanka and China, causing damage to local economies and throwing thousands of workers out of work.

On July 19, 2020, Esquel filed a motion for a preliminary injunction to halt the ongoing and irreparable harm caused by Changji Esquel’s inclusion on the Entity List.  The company succeeded, on July 31, 2021, in obtaining a commitment on the part of the Department of Commerce’s End-User Review Committee to remove Changji Esquel from the Entity List under certain conditions.  Litigation deadlines were extended in order to allow Changji to comply with these requirements.  However, no timeline has been provided for either party, and on August 27 Esquel filed to reset a hearing within 21 days.   The court has not yet ruled on the motion.

Amended ComplaintEsquel Statement