Uyghur Forced Labor Disclosure Act
- Sponsor
- Rep. Subramanyam, Suhas [D-VA-10]
- Committees
- Financial Services Committee (primary)
- Last action
- May 14, 2026
Bottom line
This bill aims to increase transparency and accountability regarding forced labor in the XUAR within the supply chains of publicly traded companies, with significant compliance obligations and potential penalties for issuers.
What it actually does
This bill amends the Securities Exchange Act of 1934 to require publicly traded companies to disclose and certify that their supply chains are free from forced labor originating from or linked to the Xinjiang Uyghur Autonomous Region (XUAR). It mandates independent verification of these disclosures by Commission-approved third-party auditors and imposes penalties, including denial of securities registration, for non-compliance or misrepresentation. The bill also requires annual reporting on any engagement with XUAR-linked entities or forced labor, including detailed commercial activity and due diligence measures.
Proponents argue
Supporters argue the bill strengthens existing efforts to combat forced labor and human rights abuses in the XUAR by leveraging financial markets to compel corporate responsibility. They believe it provides investors with critical information to make ethical investment decisions and ensures that U.S. capital is not inadvertently supporting forced labor practices. This legislation is seen as a crucial step to align U.S. economic activity with its human rights values.
Opponents contend
Potential opponents might argue that the compliance burden and costs associated with independent verification and detailed supply chain mapping could be excessive for businesses, particularly smaller ones, potentially impacting competitiveness. They might also raise concerns about the feasibility of obtaining reliable independent verification in the XUAR and the potential for unintended economic consequences or geopolitical tensions arising from such stringent disclosure requirements.
The bill is concise and its core provisions are clearly stated, making it accessible for a reader to understand its main objectives and requirements within a reasonable timeframe.
Section 2, amending Section 12 of the Securities Exchange Act of 1934
Mandatory Certification of XUAR-Related Activities for Securities Registration
This provision requires companies seeking to register securities with a national exchange, those merging with a listed company, or those filing a registration statement under subsection (g), to submit documentation. This documentation must demonstrate whether their supply chains, directly or indirectly, involve goods or merchandise from the XUAR or produced by forced labor. The documentation must be independently verified by a third-party auditor approved by the Securities and Exchange Commission (SEC).
Supporters argue
Supporters argue this provision is crucial for preventing companies with ties to forced labor from accessing U.S. capital markets, thereby upholding human rights standards and providing investors with ethical transparency. It ensures that U.S. financial systems do not inadvertently support egregious human rights abuses.
Critics contend
Critics might argue that this creates a significant barrier to entry for companies, potentially stifling economic activity or disproportionately affecting companies with complex global supply chains. They may also contend that obtaining reliable independent verification in the XUAR region presents unique and potentially insurmountable challenges.
Tradeoffs
This provision balances the goal of combating forced labor and promoting human rights with potential impacts on corporate compliance costs, market access, and the practicalities of auditing in a geopolitically sensitive region.
Section 2, amending Section 12(m)(3) of the Securities Exchange Act of 1934
Transparent Documentation of Supply Chain Links
The SEC rules mandated by this bill must require issuers to provide highly detailed information about their supply chains. This includes listing the name, address, and sourcing quantities from each smelter, refinery, farm, or manufacturing facility involved in producing goods from the XUAR or by forced labor. This information must be provided in English and, if different, the most commonly spoken language of the country where the issuer is incorporated.
Section 2, amending Section 12(m)(6) of the Securities Exchange Act of 1934
Additional Penalties for Violations in Registration
This provision establishes specific and severe penalties for issuers who fail to comply with the registration requirements, including any misrepresentation of the required supply chain information. If a violation occurs, the applicable national securities exchange is prohibited from approving the issuer's application. Furthermore, the issuer is barred from re-filing the application for a period of one year.
Section 3, amending Section 13 of the Securities Exchange Act of 1934
Annual Disclosure of XUAR-Related Activities
This section requires issuers filing annual reports or proxy statements to disclose whether they or their affiliates, directly or indirectly, engaged with entities using or sourcing goods from the XUAR or produced by forced labor. The disclosure must include the nature and extent of commercial activity, gross revenue and net profits attributable to such goods, alternative sourcing options, and a description of due diligence measures taken. It also requires disclosure of involvement in surveillance technologies used to facilitate human rights abuses.
Section 2(b) and Section 3(b)
Sunset Provision
The amendments made by this Act will be automatically repealed on the earlier of two dates: either 8 years after the date of enactment, or the date on which the President submits a determination to Congress that the Government of the People's Republic of China has ended mass internment, forced labor, and any other gross violations of human rights experienced by Uyghurs, Kazakhs, Kyrgyz, and members of other persecuted groups in the Xinjiang Uyghur Autonomous Region.