The bill seeks to extend certain provisions of the Foreign Corrupt Practices Act.

By Erin Brown Jones, Paul A. Davies, Nathan H. Seltzer, and James Bee

The U.S. Congress continues to take interest in implementing legislation to curb alleged human rights abuses in the supply chain in China and elsewhere, as evidenced by two new pieces of legislation introduced in the Senate this month.  These bills follow the implementation of the Uyghur Forced Labor Prevention Act, or UFLPA, in December 2021. For more information on the UFLPA, see this Latham blog post.

Proposed Expansion of FCPA to Include Forced Labor

On February 3, 2022, US Senator Marco Rubio (who also introduced UFLPA) introduced a bill that seeks to extend provisions of the Foreign Corrupt Practices Act (FCPA) to cover what he views as widespread improper corporate conduct by US companies in China. The bill, titled “Countering Corporate Corruption in China Act of 2022,” would specify that the definition of “corrupt” in the FCPA extends to include not just actions to corruptly obtain or retain business, but also actions that:

• Deny, obfuscate, excuse, or assist a third party in committing:
  • The subjection to forced labor, political indoctrination of, and other human rights abuses with respect to Uyghurs and certain other ethnic groups by the Chinese government in the XUAR (or comparable treatment of members of other ethnic, religious, and political groups who reside elsewhere in the People’s Republic of China);
  • Censorship, by the Chinese Communist Party, the Chinese government, or the Hong Kong government; or
• the extrajudicial rendition, arbitrary detention, torture, or other violations of internationally recognized human rights in Hong Kong
• Support, legitimize, or recognize the territorial claims of China in Taiwan, Tibet, Korea, the South China Sea, the East China Sea, or another location in which such a claim is contested
• Express political advocacy in favor of the Chinese Communist Party
• Make certain forms of investment (referred to in the bill as “covered investments”) in partnership with China’s Belt and Road Initiative in certain prohibited Chinese entities.

Human Rights Supply Chain Audits

On February 8, 2022, a bipartisan bill known as the Slave-Free Business Certification Act was introduced to the Senate.  This bill would require certain large companies (i.e., more than $500M in annual revenue) to conduct annual audits into forced labor use in their supply chains, including direct and indirect suppliers as well as “on-site service providers.”

Both bills still have a long way to travel in the legislative process, but their introduction is further evidence of the increasing steps that US lawmakers are taking in relation to allegations of human rights violations in corporate supply chains, especially those related to China and the XUAR.

Latham & Watkins will continue to monitor the progression of these bills and further developments in this area.