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UPDATE 1-U.S. lawmakers seek to tighten ban on forced-labor goods from China's Xinjiang

David Brunnstrom

China's Xinjiang@ (Adds statements from Coca-Cola and Nike)

WASHINGTON, March 11 (Reuters) - Leading U.S. lawmakers proposed legislation on Wednesday aimed at preventing goods made from forced labor in China's Xinjiang region from reaching the United States.

The legislation would alter existing rules and require importers to obtain certification from the U.S. government that goods were not produced using forced labor by minority Uighur Muslims in Xinjiang.

The Uyghur Forced Labor Prevention Act was co-sponsored by Republican Senator Marco Rubio and Democratic Representative James McGovern, co-chairs of the bipartisan Congressional-Executive Commission on China (CECC).

The heart of the proposed new law is a "rebuttable presumption" that assumes that all goods manufactured in Xinjiang are made with forced labor and therefore banned under the 1930 Tariff Act, unless the commissioner of U.S. Customs and Border Protection certifies otherwise. This would shift the burden of proof from the current rule, which bans goods if there is reasonable evidence of forced labor.

The bill also calls for the U.S. president to impose sanctions on "any foreign person who 'knowingly engages"' in forced labor of minority Muslims and would require firms to disclose dealings with Xinjiang.

The United Nations estimates more than a million Muslim Uighurs have been detained in camps in Xinjiang over recent years as part of a wide-reaching campaign by Chinese officials to stamp out terrorism.

The lawmakers announced the move as the CECC released a report saying forced labor inside and outside of internment camps was part of "systematic repression" of minority groups in the Xinjiang Uighur Autonomous Region (XUAR).

MAJOR MULTINATIONALS NAMED

The report, compiled by CECC staff and citing reports in the Wall Street Journal, New York Times and other Western media, listed major multinational firms, which are named in the bill and suspected of "directly employing forced labor or sourcing from suppliers that are suspected of using forced labor."

It said they included sportswear firms Adidas and Nike, U.S. wholesaler Costco, high-street fashion retailers Calvin Klein, Esprit, H&M, Patagonia and Tommy Hilfiger, as well as the Coca-Cola Company, and the Campbell Soup Company.

If the proposal becomes law, it could have a significant impact on the cotton industry in Xinjiang, which produces a substantial proportion of the world's supply of the commodity.

Its introduction is likely to anger China, months after Beijing and the administration of U.S. President Donald Trump reached an agreement to ease a damaging trade war.

On Wednesday, China denied Uighurs were subject to forced labor after senior Democratic Senator Bob Menendez accused U.S. firms of willfully ignoring "horrific" conditions in Xinjiang and urged the Commerce Department to prevent American firms and consumers buying goods produced with such labor.

A statement from Coca-Cola said the firm prohibits the use of all forced labor by any company that directly supplies or provides services to its business. It said a facility belonging to Chinese firm COFCO Tunhe, which supplies sugar to Coca-Cola, "passed an internal audit which covers these issues.

In a statement on its website, Nike said it does not directly source products from Xinjiang and has a code of conduct forbidding use of forced labor. It said it was engaging with all of its suppliers to evaluate compliance with this.

Nike also said it had been "conducting ongoing diligence with our suppliers in China to identify and assess potential risks related to employment of people from XUAR."

H&M said it was looking into the matter, while the other firms did not immediately provide comment.

The CECC said it had observed credible reports that products made at least in part with forced labor in Xinjiang included textiles, cell phones, food products, shoes, tea and handicrafts.

It put the number of Uighurs and other ethnic minorities who are or have been detained in Xinjiang at 1.8 million.

A report by an Australian think tank in early March said tens of thousands of ethnic Uighurs were moved to work in conditions suggestive of forced labor in factories across China supplying 83 global brands.

On Monday, the Washington-based Fair Labor Association, which conducts due diligence for multinational firms, including Adidas, Esprit, Nike and Patagonia, said it was "deeply troubled by credible reports of forced labor and other violations of fundamental rights in Xinjiang."

"We have directed our affiliates to review their direct and indirect sourcing relationships, identify alternative sourcing opportunities, and develop timebound plans to ensure that their sourcing is in line with the FLAs principles," it said. (Reporting by David Brunnstrom; Editing by Matt Spetalnick, Andrea Ricci and Tom Brown)