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7 Apple suppliers in China have been linked to forced labor programs, according to a report from The Information. AEI Visiting Fellow Michael Mazza joins Yahoo Finance Live to discuss.
AKIKO FUJITA: Let's bring in our guest Michael Mazza. He's AEI Visiting Fellow. Michael, it's good to talk to you today. It feels like Apple is just the latest brand here, a Western brand that's sort of caught in this geopolitical discussion. We had H&M, Adidas, other companies that were accused of using forced labor to source their cotton. How are you looking at this latest debate in the larger context of where the US gets its supplies from, and specifically, the importance of the Xinjiang region?
MICHAEL MAZZA: Yeah, look, companies keep denying this. And independent researchers keep finding more and more evidence that there are forced laborers in Western companies' supply chains. Look, I think economic decoupling is often dismissed as unrealistic. And there's good reasons for that. But I'd say that it's China, which is forcing this reassessment in the United States, both in the government and among companies. And that's due largely to what are really awful human rights abuses in Xinjiang right now.
AKIKO FUJITA: We've had a number of bills that have been introduced in Congress that essentially says that if you know that the sourcing is coming through forced labor, US companies would need to halt that right away. To what extent can you actually source that? If we're talking about some of these larger corporations and the pressure they're facing, how easy is it to source that way? And ultimately, from a US policy perspective, how do you think the Biden administration tackles this?
MICHAEL MAZZA: Yeah, look, this is a really tricky question. You know, as I say, independent researchers keep digging up evidence that there are forced laborers in the supply chains of a number of Western companies. You know, I think it is the case that this is a tough due diligence problem for Western companies operating in the Chinese ecosystem. You know, they work with subcontractors who have subcontractors.
You know, but if it turns out that that is too much of a challenge, I do think that American companies, other Western companies, have a responsibility to start looking elsewhere, to try to disentangle themselves from Chinese supply chains. It's incredibly complicated, but the alternative at this point is to continue to rely on forced labor and to-- and because of that, implicitly support and enable, again, really horrible human rights abuses in China.
ZACK GUZMAN: Yeah, and maybe not surprising to see both sides of the political aisle bear against those horrible abuses you're talking about. But when it comes to maybe what needs to change in regards to how these companies operate, it wasn't too long ago I think of the big tech hearing we heard all of the heads of these companies come out and say, yes, obviously, we don't want to be attached to that. But would it require just, I suppose, shifting away from that model, as you're describing it, in terms of subcontractors upon subcontractors and what would need to change there, what's the political viability of anything like that coming through to solve this?
MICHAEL MAZZA: Well, look, I mean, there's going to be no support from the Chinese government for solving this problem or making it easier. And, you know, it's unclear to me what role the United States government can play here and unless it wants itself to take on and fund and resource an effort to do the sorts of due diligence that is required to ensure that forced labor, slave labor doesn't make its way into the supply chains of American companies. I haven't seen an effort to do that. And, you know, frankly, this is the responsibility of American companies to ensure the security and the viability of their own supply chains.
ZACK GUZMAN: All right, Michael Mazza, AEI Visiting Fellow, appreciate you stopping by here to chat with us on that.