Applied DNA Sciences: DNA Technology & Tagging Shines the Light on Trade Rule Evasion and Labor Abuse in Supply Chains
In this new era of heightened scrutiny around illegal trade practices such as the widespread use of forced labor in Xinjiang, China and the ongoing circumvention of U.S. trade laws, Applied DNA Sciences stands at the forefront of innovation with DNA technology solutions that offer supply chain authentication.
A publicly traded company listed on the NASDAQ, Applied DNA is a new NCTO member company that has developed forensic solutions for secure supply chain traceability and brand protection, says MeiLin Wan, Vice President of Textile Sales at Applied DNA.
To watch short video on Applied DNA Sciences, click here.
The company is headquartered in Stony Brook Long Island, New York, and works in many different U.S. industries including textiles such as cotton, recycled polyester, specialty coatings, thread, apparel and footwear, as well as nutritional and pharmaceuticals, personal care and printing.
Wan says the company’s supply chain traceability solutions and forensic testing support clients in relation to verifying and preventing circumvention of the yarn forward rule of origin in free trade agreements, around issues related to complying with the Uyghur Forced Labor Prevention Act, (UFLPA) and in issues pertaining to Made in America regulations.
Applied DNA’s forensic analysis and DNA tagging has become all the more critical in the wake of heightened government scrutiny of abhorrent conditions and forced labor practices in Xinjiang, China, and the abuse of Uyghur Muslim minorities in internment camps forced to make apparel, footwear and other consumer products for scores of global companies.
See a recent op-ed by Applied DNA Sciences CEO James Hayward, “Stopping Uyghur Forced Labor Imports: A Made-in-America Solution,” in Sourcing Journal here.
In addition to partnering with commercial brands and companies, Applied DNA is also a federal and New York state contractor. The company also provides COVID PCR testing for public universities such as the City University of New York (CUNY) and the State University of New York (SUNY) Stony Brook, and private industry.
NCTO sat down with MeiLin Wan for a Q&A to discuss the ever- growing importance of traceability in supply chains in light of stepped up enforcement of goods made with forced labor and ongoing scrutiny of trade rule circumvention.
NCTO: In a climate of heightened scrutiny of illegal trade practices and labor abuses in the global supply chain, how important are your services and what do you provide?
WAN: Applied DNA provides secure supply chain traceability solutions as well as forensic testing support for clients specifically in relation to the yarn forward rule of origin, as well issues relate to the Uyghur Forced Labor Prevention Act and other Made in America regulations.
Some of the material we work with and do testing for includes cotton, recycled polyester, leather, down and feather, and specialty coatings. We also provide advanced identification solutions for sew and embroidery thread.
You can see there is wide range of different security and authenticity applications related to the use of our platform technology, which we call “CertainT”. Because there is so much uncertainty in supply chains today, the platform was aptly named “CertainT” to provide traceability transparency and trust within supply chains at any point in the supply chain in any area of textiles.
Applied DNA is a U.S. federal contractor. We also are a contractor for New York state. We provide tens of thousands of PCR test that include DNA authentication services as well as provide COVID PCR diagnostic testing in large scale.
NCTO: Can you highlight one important aspect of NCTO that is critical to advance your interests and efforts, as well as that of the U.S. textile industry?
WAN: One important is to have a system to enable companies to differentiate themselves through the use of DNA, specifically DNA tagging. This is an area that we have been working on for over 20 years in terms of developing a way to be able say “It’s my DNA tag that is used for my brand, for my products and for my supply chain.”
We believe that by working with NCTO and its members we can provide a way for a. differentiation and b. to be able to secure the materials that are made and developed in the U.S. so that when they come back into the U.S. there’s a way to verify those products, and also enforce the trade rules that relate to the product coming back into the U.S.
NCTO: Our membership is largely comprised of U.S.-based companies employing U.S. workers. Why is it important for domestic manufacturers to trace their supply chains, as opposed to importers? Why are your services important to our members?
WAN: It is important for domestic suppliers and brands to use a system like ours. The number one reason is to protect brands and their good will. That can be in the form of intellectual property. So, for example you might have a specialty coating or fiber that you created and developed here in the U.S. If you are able to tag your materials, that provides you a way to verify that a. this is how it started and b. this is how it ends up in different materials and production.
It is the first line of defense, and it is also the best offense to be able to have a system that is based in DNA technology that is forensic.
The second biggest issue is portable testing. As we know, with COVID PCR tests, the time it takes to do a COVID test is now 5-10 minutes. It is really fast. It can be done at a doctor’s office.
With textiles, we believe that mills using our system can take accountability and do the testing themselves. We can train them on how to test materials they have tagged and also test them in the field.
That’s the power of technology to provide a. more intelligence and information and, b., put the accountability back on the supply chain. Yes, auditing is good, but it is better that you know what is going on in your supply chain.
NCTO: Is the biggest challenge addressing trade rule circumvention or labor abuses in terms of adoption of traceability systems in the supply chain?
WAN: I think the biggest challenge is that brands and manufacturers need to recognize is the importance of being able to prove the origin of their products and take the necessary steps to implement and adopt a platform like ours.
I think it is at very high level. It’s a strategic decision that has to be made by organizations to adopt the fact that that we need a system to provide due diligence, not just to prove it is a product made here in the U.S., but also to be able be sure it isn’t blended with, for example, cotton from Xinjiang. It’s not good if it starts off well in the U.S. and ends up being blended and defrauded somewhere else and comes back as not a very pure product.
I think that adoption is linked to the culture and goals of the organization and their decision to really support the claims that they are making.
NCTO: What are the top challenges your firm sees in traceability and in the application of DNA tagging for the U.S. textile industry this year?
WAN: There are a few key challenges for the industry this year, specifically related to the use of raw materials from countries that don’t qualify for rules of origin, with regards to yarn forward. Specifically, how do you prove that raw materials really did originate from the U.S. and did not contain material from a non-qualifying region like China?
The number one challenge is really yarn forward rule of origin compliance. How do we help U.S. yarn and fabric producers identify products that may not be qualifying from other regions. Secondly, the use of Xinjiang cotton and other materials from forced labor countries. Applied DNA has had a number of discussions with CBP about DNA traceability technology; how you prove that the cotton does not come from Xinjiang. We can also help NCTO members in assuring their supply chains are free from forced labor regions using cotton or viscose or other materials.
There are challenges but we also believe there are opportunities to set the record straight, to have good system in place for due diligence, and a good system in place to support your claims you are making about your product.
We always say: “If you claim it, you own it.”
This coming year in 2023, you should be seeing more companies coming out and explaining how they go about proving their claims and also protecting their brands.
NCTO: Are you finding that brands and retailer are more receptive to this with the enactment of UFLPA?
WAN: Yes, brands and manufacturers are more receptive to using DNA traceability technology more than they were maybe 10-year ago. I think UFLPA has accelerated the adoption and willingness to be more compliant,
But I also think that with new regulation there is opportunity to use technology such as ours to differentiate yourself in the market, and the companies that are ahead of the curve are thinking that. They are thinking much longer term.
How do I use technology like this to prove multiple things like sustainability without greenwashing or using cotton without forced labor?
I think there are a lot of companies trying to use blockchain as the basis for how they do their traceability and tracking. Blockchain is a tool like anything else but doesn’t necessarily provide you the raw data as to the actual product itself, so you could have a fraudulent blockchain just like the FTX of the cryptocurrency situation that blew up. The basis for that blowup is the fact there was no basis or infrastructure for the value of any of the assets of materials behind it.
So, if you don’t have data and you don’t have integrity on actual products in the supply chain then what do you have is another crypto system for blockchain. I know that it seems easy to say, “I have a traceable system,” but when something is too good to be true, it usually is.”
We have been doing traceability and authentication for 17 years and understand what is required to actually prove your claims of the source of your materials.
There is no substitute for actually being on the ground, going to a mill to see how cotton is produced and following that cotton or recycled polyester from beginning all the way to the end.
We hope that through working in collaboration with NCTO and its membership that there is way to communicate that message, of fiber to finished goods, in a very strong and cohesive way, because it affects policy and it affects the enforcement of trade rules and regulations.
NCTO: CBP issued a withhold release order (WRO) on cotton products and Congress followed by passing the UFLPA. Is this the first time seen in 17 years or longer that this kind of attention is being paid to forced labor? Do you feel it is a new era in terms of how the U.S. Government polices this?
WAN: Yes, I Think it is a new era. It is a paradigm shift in the way you communicate and support your claims. Because it is so easy for anyone to do a search on the internet to fact check and see that what you are saying.
So, there’s so much more scrutiny in terms of if how you make a claim about a material. You can’t just say because I am this brand and so loved by children all over the world that I’m above the rules about safety and the use of forced labor in my supply chain.
There is no brand that is immune to scrutiny related to any number of human and environmental issues.
I think that this new era of closer scrutiny and information sharing also puts a higher standard of care and fiduciary responsibility on companies. It is so different now.
It comes back to: “If you claim it, you own it.” Every day now some company is being brought out by an NGO or consumer to prove a claim for a 100 percent sustainable jean, for example. As a company or brand, you can’t say, “I had a great marketing campaign,” or “I’m well-known brand and you should believe what I say is true. “Those days are over.”
NCTO: Circumvention of rules of origin have been a big issue. Do you expect more attention to be paid to forced labor in light of the UFLPA legislation than to circumvention of rules of origin?
WAN: I actually think circumvention of rules of origin is somewhat related to forced labor issues. Because if you are already circumventing rules of origin in a different country like China, then there is a high likelihood you will be circumventing UFLPA and using Xinjiang cotton.
Even though legislatively, they may be independent, in practice I actually think they’re not. If you are going to cheat, you are going to cheat. It doesn’t matter what legislation you are trying to get around.
Cheating has no boundaries. That is the whole idea behind it. This is where technology could be helpful. Because not only can you know where it comes from but you can also find out if, for example, you tag something and it ends up in a location where it should not be. That also gives you intelligence about what is happening in the supply chain. We are trying to help provide more intelligence and take out the guesswork in terms of what is going on in the supply chain.