By James Davey and Helen Reid

LONDON (Reuters) - Britain must strengthen its safeguards against forced labour in supply chains to avoid the country becoming a dumping ground for products banned in other markets, lawmakers said in an report on Monday.

Lawmakers on the cross-party Business and Trade Committee called on ministers to update Britain's modern slavery legislation, penalise companies that fail to publish modern slavery statements, and consider creating a criminal offence around forced labour in supply chains.

"The UK is at serious risk of becoming a 'dumping ground' for products made with forced labour if it does not keep up with our global partners on legislative reforms to tackle modern slavery," the report said.

The United States has forced labour legislation in place banning products made in China's Xinjiang region, and European Union forced labour regulation will come into effect in December 2027.

The U.S. government and non-governmental organisations accuse China of forced labour and human rights abuses targeting Uyghur people in Xinjiang, allegations Beijing denies.

Lawmakers interviewed representatives from online fast-fashion retailer Shein, which aims to list in London this year, and online marketplace Temu as part of their inquiry, as both platforms face allegations their products contain cotton from Xinjiang.

Shein's general counsel for Europe, the Middle East and Africa, Yinan Zhu, dodged lawmakers' questions in January about the source of cotton in products shipped to the UK, and this refusal to reply was "a source of extreme concern", the report said.

In subsequent written replies to the committee's questions, Zhu said Shein does not allow Chinese cotton in products sold in the U.S., and that there is no legal restriction in Britain on the origin of cotton, but in practice there is overlap between the products Shein sells in both countries.

Shein, which sells in 150 markets worldwide, says it has a zero-tolerance policy on forced labour. Temu has also said it strictly prohibits forced labour.

(Reporting by James Davey and Helen Reid; Editing by Christina Fincher)