Regulatory intelligence for US exporters

Chinese Sanctions Reveal Tension Between Human Rights and Chinese Market Access for UK, Canada

Following the Chinese government's decision to place retaliatory sanctions on Canadian and British officials and entities for their criticism of the alleged human rights abuses in the country's Xinjiang region, lawyers in both countries are expressing concern over the rising tensions between the two sides and noticing greater business concern over maintaining Chinese market access. Neil Williams and Thomas Cattee, white collar crime lawyers at Gherson Solicitors in the United Kingdom, said the Chinese sanctions are merely symbolic without any real underlying economic effect but that sanctioned individuals in the U.K. have deferred to Chinese demands.

On March 26, China sanctioned nine British individuals and four entities for their comments criticizing China's treatment of Xinjiang's Uyghur Muslim minority (see 2103260014). Sanctions were also levied against a member of the Canadian parliament and one of the body's subcommittees (see 2103300030). Sanctioned U.K. entities include the Essex Court Chambers, commercial lawyers in central London, for a post criticizing China over Xinjiang. The opinion piece has since been removed from the law firm's website.

“Clearly there’s cause and effect here, since Essex Court are the targets of the sanctions, but it’s got more to do with the wider picture,” Williams told Export Compliance Daily. “They are part of a political football that’s being passed around, and it has wider implications with other areas of sanctions that have been imposed between the parties.” While Williams doesn't believe the sanctions will have large economic effects, removing access to the Chinese market may be a business-threatening proposition for some listed parties. “That’s probably why we’ve seen the withdrawal of the opinion because they don’t want to get involved in anything potentially damaging because they want access to Chinese markets if they’re doing global litigation,” he said.

Despite this political brinkmanship, Williams and Cattee believe that both economies are too important to each other for an all-out trade war, especially given what the COVID-19 pandemic and Suez Canal crisis revealed about the reliance on global supply chains. “It’s unlikely any party will truly want a full-blown escalation into a trade war, but at the same time it’s unlikely ground will be given by any side regarding the issues which have led to sanctions being imposed, such is the importance placed on them by all,” the pair wrote in comments sent in an email. “What is clear is that solutions will need to be found, and quickly.”

Jessica Horwitz, of Bennett Jones' Toronto office, expressed a more hesitant view on what the sanctions mean for the Canadian economy and how they could be widened if relations were to further deteriorate between China and the West. “Sanctions on both sides could be expanded in the future, possibly in an incremental and targeted way to send very specific political messages, along the lines of what we have seen with Canada's sanctions on Russia and Ukraine since 2014 in connection with the Crimea conflict,” she emailed. “The Canadian government has indicated that it is investigating allegations of forced labour in Xinjiang. Following an investigation, we may see enforcement of import prohibitions by the [Canada Border Services Agency] to put pressure on Canadian businesses that have supply chains involving Xinjiang.”

As part of its retaliation against Canada, China sanctioned Canada's House of Commons Subcommittee on International Human Rights of the Standing Committee on Foreign Affairs and International Development for their comments condemning human rights abuses in Xinjiang. Horwitz said while it is unclear how sanctions on a political subcommittee that doesn't do business in China would work in a practical sense, the move is a clear political signal of displeasure between the two sides. This displeasure, Horwitz said, could lead to further action and greater scrutiny by global businesses into their supply chains.