Late last year, US President Joe Biden signed legislation to prohibit imports to the US from China's Xinjian region.
Given 85 per cent of China's cotton is produced in this region, and China accounts for more than 20pc of global cotton production, this is an important development for the global cotton sector.
The Uyghur Forced Labor Prevention Act follows US accusations that China has employed slavery and undertaken genocide of the predominantly Muslim Uyghur minority in the resource-rich region of Xinjian.
The Act bans imports unless companies can prove goods from the region were not produced with forced labour.
In relation to cotton, the assertion is that forced labour is employed in production, picking and in processing into yarn, textiles and apparel.
China exports negligible volumes of unprocessed cotton to the US - or indeed anywhere - but accounts for between 25 and 30pc of cotton products imported into the US.
It will be in this trade that the pressure of the new US legislation will come to bear.
China could retaliate against the legislation by imposing a trade barrier on US cotton, which is a measure that would cause more immediate waves for the global cotton sector.
But for now the focus is on yarn, textiles and apparel from Xinjian.
Those US importers, brands and retailers that have been sourcing products made from Xinjian cotton - and/or manufactured in the Xinjian province - must now prove compliance with human rights, rather than just avoid investigation of their potential violation - or otherwise change supply origins.
Diversion to alternative supply origins is already occurring.
Well-known sports brands, global fashion labels and renowned department stores in the US and elsewhere have already sought to distance themselves from Xinjian cotton and cotton products.
This is in part due to the US issuing a Withhold Release Order 12 months ago, which mandated imported Xinjian cotton products could be detained on suspicion of the violation of human rights in production.
It is also in part due to growing global consumer concern with the provenance of products, including on human rights grounds.
Those looking for new yarn, textile and apparel suppliers have been able to help fuel the cotton-processing industries in Bangladesh, Vietnam and Pakistan - which have already been growing due to favourable costs of production.
It is fortuitous that these are also the markets Australia has been sending more cotton to in the past 18 months, while receiving the unofficial cold shoulder from Chinese buyers.
But it is also a good alignment for cotton processors seeking to meet the increasingly-discerning requirements of importers, brands and retailers trying to satisfy consumer demands, given Australia is well placed to verifiably supply cotton that is not only high quality, but also aligns with human rights and shows gains in sustainability.
The Uyghur Forced Labor Prevention Act is important because of the proportion of global yarn, textiles and apparel that has its origins in the Xinjian region.
But its greater importance is that it further shines the spotlight of provenance and traceability on global cotton markets.
That is no bad thing for the Australian industry, which performs favourably in both meeting market expectations and in its capacity to verify this for buyers.
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