US states urge SEC to verify Shein’s forced labor compliance

Attorneys general from 16 US states sent a letter to the Securities and Exchange Commission asking that it require fast-fashion retailer Shein to independently verify that its products aren’t made with forced labor.

The letter comes as Shein, which has been considering a public offering in the US according to reports, faces increased scrutiny around its trade, labor and environmental practices. It shows US pressure on the Singapore-based retailer, which makes the majority of its garments in China, is expanding beyond Washington. 

The attorneys general, from mostly Republican-led states including Montana, Virginia and Utah, urged the SEC to require as a condition of being listed on a US-based securities exchange that “any foreign-owned company certify via a truly independent process that it is compliant with Section 307 of the Tariff Act of 1930, which prohibits the import of any product manufactured wholly or in part by forced labor.”

A Bloomberg investigation last year found scientific evidence that cotton produced in the Xinjiang region, which has been linked to forced labor, was present in clothing sold by Shein.

The letter suggests that Shein’s political challenges have expanded beyond Washington, where the company spent $600,000 on lobbying in the second quarter. Lawmakers, both at the federal and state level, are wary of US-China relations and have grown skeptical of Shein’s dominance among shoppers seeking low-priced clothing in the US. 

“American exchanges should have a zero-tolerance policy for foreign companies that seek access to our markets but refuse to follow our laws, especially when the implicated laws are meant to prevent serious human rights abuses,” the attorneys general wrote. “We believe in upholding the rule of law and protecting our economy.”

Montana, led by Governor Greg Gianforte, in particular has expressed concerns about other foreign-owned companies, particularly those with ties to China, including social media app TikTok, which the state banned in May.

In July, Representative Jennifer Wexton introduced a federal bill to amend the Securities Exchange Act of 1934 that would require companies listing in the US ensure they don’t use forced labor