Top 40 supplier Next Level Apparel (NLA, asi/73867) says that a small amount of its cotton fabric inventory has tested positive for originating from Xinjiang – a region in northwestern China from which imports are banned due to the suspected use of forced labor there.

NLA has quarantined the fabric and no additional garments will be made with it, the Torrance, CA-based promotional products company told ASI Media.

Cotton in Xinjiang.

Next Level Apparel was alerted to the connection to the Xinjiang Uyghur Autonomous Region (XUAR) by Tyler Merritt, the CEO/co-founder of Georgia-based clothing company Nine Line Apparel. The business was conceived as a promotional products distributorship but evolved into its own retail line of clothing. Nine Line also offers custom-printed garments.

Merritt, a U.S. Army Special Operations aviation veteran whose clients include the military, told ASI Media that conducting business ethically is paramount to Nine Line Apparel. That includes sourcing product that’s produced by workers who are being treated humanely.

To that end, Merritt had Oritain, a company that uses forensic and data science to verify the origin of products and raw materials, conduct isotopic testing on blank T-shirts from vendors that included Next Level Apparel. Oritain analyzes the “chemical footprint” of a material like, say, cotton used in a T-shirt and thereby can determine the country/area from which the fabric was sourced.

Merritt provided ASI Media with copies of the test results he received from Oritain. The independent Oritain results showed that two Next Level Apparel T-shirt styles – NL 3600-Military Green and NL 3600-BLK-L – were consistent with originating from Xinjiang. The other vendors’ apparel did not trace back to Xinjiang. Merritt notified Next Level of the results.

“When Nine Line contacted us to express their concerns, we offered them the opportunity to return their inventory and subsequently quarantined it,” Next Level CEO Randy Hales told ASI Media. “We conducted our own testing and discovered that a very small amount of our fabric inventory tested positive for XUAR cotton, and we have quarantined that inventory.”

In a statement, NLA said it has a “zero-tolerance” policy on forced labor and that confirmed instances of forced labor by a factory, mill or other entity in its supply chain network “may result in the termination of the business relationship.”

291
Number of imported apparel, footwear and/or textile shipments denied entry into the U.S. under the Uyghur Forced Labor Prevention Act (UFLPA) to date. (U.S. Customs and Border Protection)

Most suppliers in promo rely on overseas partners, whose businesses the suppliers do not own, to produce the products they sell in North America. Hales told ASI Media that the vendor that provided the Xinjiang cotton has been fired. “We have terminated our relationship with the supplier in question,” Hales said.

Merritt said that when he initially contacted Next Level Apparel, the supplier rebuffed him. A letter he shared with ASI Media from an attorney representing NLA threatened litigation over a posting Merritt had made – “Are You Unknowingly Supporting Slavery?” The posting discussed the Next Level Apparel/Xinjiang connection.

Merritt said he decided to go public with the Xinjiang test results regarding NLA “after months of getting nowhere” with the company. His story was picked up by a number of mainstream media outlets.

“I’ve dedicated my life to helping those who can’t help themselves,” Merritt told ASI Media. “As a former officer in the U.S. Special Operations Command, I have never backed down from that responsibility and will continue to do so in my civilian endeavors. Until companies stop using cotton from Xinjiang, nothing will change.”

Hales said he can’t comment on any possible ongoing legal actions at this time. He stated that NLA is not facing federal charges/fines over the Xinjiang fabric connection as it has taken appropriate steps.

NLA Sourcing Practices

Due to the complex interwoven global nature of modern supply chains, in which for instance a shirt screen-printed in the U.S. may have been sewn in one country with cotton originating from multiple other countries, it can be difficult to determine all the origin points of materials that go into making a product, sourcing experts have said.

Nonetheless, it’s incumbent on suppliers to source ethically and legally. And that’s exactly what NLA has always strived to do, said Hales.

“NLA has had a longstanding practice of requiring suppliers to sign affidavits guaranteeing the fabrics they provide come from untainted sources,” Hales said. “In addition, we continually update sourcing information and conduct onsite inspections.”

“Next Level Apparel is committed to ethical and responsible manufacturing upholding international labor standards.” From a statement by Next Level Apparel

In March, Next Level Apparel announced a partnership with Oritain, which will help the supplier to confirm the geographic origin of cotton fibers. Hales told ASI Media that NLA was in discussions with Oritain about origin testing before hearing from Merritt.

Through the partnership, Next Level Apparel said it will be able to independently test products from its supply chain to ensure the integrity, quality and consistency of its cotton textile products. “NLA tests existing fabric inventories and incoming fabric as an added verifiability measure,” Hales said.

The fabric that Merritt discovered had a Xinjiang origin that pre-dated NLA’s Oritain partnership.

In January, Next Level Apparel pledged that it was switching over to U.S.-grown cotton for all orders placed after Feb. 1. And then in February, the supplier announced a partnership with GK Global to nearshore its fabric production supply, a move meant to shorten lead times, reduce geopolitical sourcing disruption risks and improve supply chain transparency, according to executives.

“Next Level Apparel is committed to ethical and responsible manufacturing upholding international labor standards,” a company statement said. “We will continue to collaborate with industry associations, such as American Apparel & Footwear Association and the Fair Labor Association, as well as with industry experts, partners, stakeholders and other organizations, to understand, evaluate and address the critical global issue (of forced labor).”

The Xinjiang Ban Explained

Following bipartisan approval in Congress, President Joe Biden signed the Uyghur Forced Labor Prevention Act (UFLPA) into law in late December 2021.

Legislators passed the act after reviewing what proponents said is an overwhelming amount of evidence that China’s government has been pressing Uyghur people and other ethnic minorities primarily of the Muslim faith into forced labor in the region.

490
Total number of imported shipments denied entry into the U.S. under the UFLPA since enforcement began last year. (CBP)

Under the UFLPA, all goods, merchandise, articles and merchandise extracted, produced or manufactured in whole or in part in Xinjiang, or by entities identified by the U.S. government in the UFLPA Entity List, will be presumed to be from forced labor and will be prohibited from entering the U.S. The primary goal of the ban is to compel China’s authorities to change their alleged inhumane practices. Beijing denies any wrongdoing.

As the Next Level Apparel case shows, even companies intent on sourcing ethically can still potentially have inputs from Xinjiang slip into supply lines. Cotton can be especially tricky given the amount of it that Xinjiang produces. When U.S. Customs and Border Protection (CBP) began enforcing the act in 2022, an estimated 20% of the world’s cotton came from China, and 84% of that was from Xinjiang.

Since enforcement began, CBP has investigated 3,588 imported shipments under the UFLPA. Nearly 500 shipments (490) have been denied entry to the U.S. Almost 300 (291) of the denied shipments were of products in the apparel, footwear and textiles segment. That’s more than any other product category. Other categories include electronics, agricultural/prepared products, industrial/manufacturing materials, machinery, base metals and pharmaceuticals.

There are actions promo products companies that import can take to vet their supply chains and minimize the chances of exposure to Xinjiang. Beyond fabric origin testing, these include conducting a detailed supply chain inspection, collecting documentation/affidavits that demonstrate that items have no connection to Xinjiang from each identifiable supplier and manufacturer in a supply chain, and shifting sourcing/overseas partners when necessary.